that high inflation, large government deficits, slower productivity growth, and lower commodity prices have tended to complicate canada ’ s economic situation over the past 25 years. but as i said at the beginning, much of the greater sense of difficulty and concern that canadians have felt in the 1990s has to do with the after - effects of the strong medicine we have had to take to turn our economic performance around. the success we have had so far in this regard bodes well for our future. canada ’ s inflation rate has come down dramatically, averaging less than 2 per cent since 1992. and there are now agreed targets between the bank of canada and the government of canada to keep inflation low and stable in the future. more importantly, canadians have come to expect continued low inflation and to build that expectation into their plans. the federal government and most provincial governments now have balanced budgets or are running surpluses. the total government debt - to - gdp ratio, which peaked at 70 per cent in 1996, has since fallen to 63 per cent. with present prudent fiscal policies, it should continue to decline steadily. future gains in productivity are difficult to predict. certainly, our improved inflation and fiscal situation, together with the low interest rates that they have made possible, provide the best climate for fostering productivity that we have had in a long time. moreover, canadian businesses have undergone major restructuring during the 1990s in response to increasingly competitive world markets. business investment has been rising smartly recently and more firms have been adopting new production technologies. it is also interesting to note that, after eight years of economic expansion, productivity growth in the united states has picked up, rather than falling off as usually happens at this stage of the cycle. tight labour markets seem to have encouraged a record level of investment in that country and more efficient use of technology than before. while the pickup in canadian investment in machinery and equipment has lagged somewhat behind that in the united states, new technology is not the exclusive preserve of our u. s. neighbours. so i hope that in canada, too, we will see a similar payoff from the adoption of new technology and a comparable improvement in productivity. as for commodity prices, there has already been some turnaround this year, but a firmer recovery requires a strengthening world economy – in particular, a turnaround in japan and the rest of asia. the other point to note in this connection is that the relative importance of commodities in the canadian economy has declined. the share of

’ incentives away from a sole regard for the costs for the country. the recent approval by ecofin of a uniform eu deposit insurance limit is a step in the right direction. 3 finally, an eu framework would reduce the costs of dealing with troubled lcbb by making transparent the conditions under which solvency support to a failing financial institution implies state aid and becomes incompatible with eu competition rules. the commission has to this end empowered one commissioner for rapid decision - making. i wish to finish on a hopeful note reminiscent of schumpeter ’ s celebrated “ creative destruction ” concept. technological developments, by changing economic agents ’ constraints, modify their actions and prompt a new equilibrium. institutional changes also become necessary to preserve a level playing field given that asymmetric information, herding behavior, and the notorious difficulties of economic agents to measure the evolution of risk over time, make financial markets incomplete. effective institutions should affect behavior and will, in turn, suggest the need for a new equilibrium. therefore, the current crisis, by having sent the financial system way far from an old equilibrium, may end up being useful in bringing forward necessary changes to the eu financial stability framework. it may do so by moving discussions from a nearly exclusive focus on what can be delivered under the existing framework to what a framework of financial stability should deliver. thank you for your attention. the scheme increases the coverage of deposit protection to 100. 000 euros, removes all co - insurance, and is applicable to branches and subsidiaries.