##s, or an increase in volatility, resulting from the withdrawal of a major institution from trading. in this case, everything would work in reverse. the rise in var would mean a reduction in the size of trading books for a given allocation of economic capital. margin requirements for counterparties would be raised. 12 institutions would therefore sell assets, driving prices down further and increasing volatility. a vicious circle would result ( as it did in the lead - up to the rescue of bear sterns and particularly following bank of canada governor mark carney addressed procyclical capital adequacy in " from hindsight to foresight " ( speech to women in capital markets, toronto, ontario, 17 december 2008 ). available at : http : / / www. bankofcanada. ca / en / speeches / 2008 / sp08 - 16. html. some of the lessons that the current crisis holds for risk management can be found in p. duguay, " financial stability through sound risk management " ( speech to the risk management association, toronto chapter, toronto, ontario, 8 january 2009 ). available at : http : / / www. bankofcanada. ca / en / speeches / 2009 / sp09 - 1. html. the 1996 " market risk amendment " to the basel i framework included a var - based methodology to set capital requirements for the trading books of banks. for useful information on " liquidity spirals, " see m. k. brunnermeier and l. h. pedersen, " market liquidity and funding liquidity, " review of financial studies ( forthcoming ). margin requirements have risen enormously since the beginning of the financial turbulence in august 2007. this was documented, for instance, in the imf's october 2008 global financial stability report ( chapter 1, box 1. 5, 41 - 43 ). available at : http : / / www. imf. org / external / pubs / ft / gfsr / 2008 / 02 / pdf / text. pdf the failure of lehman brothers ). for those of you active in foreign exchange markets, i would note that following the asian crisis of 1997 - 98, some of these same factors were thought to have contributed to that crisis. 13 now, the assumption that most market participants use the same risk - management systems based on short historical samples is very much an exaggeration. some researchers, however, have argued that enough institutions follow very similar

development bank of canada will buy term asset - backed securities backed by loans and leases on vehicles and equipment. all of these measures are helping to meet a rising demand from business and individuals who have been finding it difficult in this environment to raise adequate funds. we have all heard reports about ongoing tightening in both the availability and the pricing of credit. nonetheless, our latest figures show continued strong growth in total household credit – 9. 6 per cent in january compared with the same period one year earlier – and limited deceleration in growth of total business credit. the latter stood at 4. 2 per cent in january compared with the same period one year earlier as accelerating growth in bank lending has helped to offset a contraction in market financing. we will continue to closely monitor credit growth and credit conditions in canada. in conclusion, as we are all very well aware, the canadian economy is feeling the effects of the global turmoil and recession. authorities have put a lot of fiscal and monetary stimulus in place – in canada and globally – to support the recovery. however, as i noted at the outset, stabilization of the global financial system remains a precondition for the global and canadian economic recoveries. investor and public confidence has been badly shaken, but will recover with the timely implementation of ambitious plans in some major countries to address toxic assets and to recapitalize financial institutions. however, if these national and multilateral measures are not timely, bold, and well - executed, canada ’ s economic recovery will be both attenuated and delayed. i would now be pleased to answer your questions.