to encourage a resilient system that can withstand shocks – even large shocks. the bank's power to achieve this goal comes from our central position as canada's monetary authority. this makes us the ultimate provider of liquidity to canadian financial institutions and to the country's financial system more generally. it also gives us a prominent voice in international organizations as well as in such domestic bodies as the financial institutions supervisory committee ( fisc ) and the senior advisory committee ( sac ). fisc and sac provide forums for the federal deputy minister of finance, the superintendent of financial institutions ( osfi ), the governor of the bank of canada, the chair of canada deposit insurance corporation ( cdic ), and the commissioner of the financial consumer agency of canada ( fcac ) to share information, coordinate actions, and advise the federal government on financial sector policy. at the international level, the bank, the federal department of finance, and the superintendent of financial institutions are represented on the financial stability forum ( fsf ). the impetus for this global forum came from a summit of g - 7 leaders in halifax more than a dozen years ago, and the fsf truly came to life in the wake of the asian crisis of the late 1990s. this entity brings together senior representatives of national financial authorities from selected countries to promote international financial stability, reduce the spread of shocks, and increase market resiliency. the importance of the fsf as a source of global coordination was recently underscored by the g - 20 leaders, with their call for its expansion to include top emerging - market economies such as china and india. as you can tell from that description, the bank has essentially two key tools at its disposal. one is our power to supply liquidity ; the other is our capacity to produce the solid research and analysis that underpins our advice and enables us to influence public sector decisions and private sector behaviour. we do not supervise financial institutions for depositor protection – that falls within the realm of osfi and cdic. nor do we regulate financial markets for investor protection – a responsibility carried out by the provincial securities commissions. 3 to carry out our responsibilities, we monitor trends in financial developments in canada and abroad, assess their implications for financial system stability, and identify risks to the canadian financial system so that we can act and convince others to act, to limit damage from economic and financial storms. we publish our assessments, based on this monitoring, in our semi - annual financial system review. the next issue

david dodge : staying the course speech by mr david dodge, governor of the bank of canada, during a panel discussion at the banco de mexico, mexico city, 12 november 2002. * * * the dramatic events of the last two years and growing concern about the near - term prospects for the global economy have created a climate in which policy - makers focus only on current economic developments and lose sight of longer - term goals. there's a natural tendency to focus on the here and now, and to use any tools that are readily at hand to deal with today's problems, without proper regard for their long - term consequences. it's easy to forget the hard - learned lessons of the past and overlook the longer - term fundamentals that are necessary to support a strong recovery and sustained positive economic performance over time. what are those fundamentals? mr. greenspan, in his opening remarks to this conference, talked about the importance of the fundamentals, going all the way back to adam smith. what's interesting is that things have not changed that much. but we don't have to reach that far in history for guiding principles. we can look at the four key principles that emerged as part of the oecd consensus during the 1980s. the first principle relates to monetary policy. it basically recognized price stability as the appropriate goal for monetary policy over the medium term. policy - makers were advised to respond symmetrically, and in a forward - looking manner, to excess demand and supply so as to keep the economy on an even keel, thus achieving price stability and maximizing output over the medium term. the second principle applied to fiscal policy and the need for a more disciplined approach to managing the public purse. rising debt levels and an aging population made it clear that concrete action was necessary to eliminate deficits and put the debt - to - gdp ratio firmly on a declining path. automatic stabilizers should still be allowed to work during economic downturns. but in good times, surpluses would be generated that would help preserve the budget balance and keep the debt - to - gdp ratio on a downward trend. the third principle focused on the need for wide - ranging structural reform to reduce rigidities and inefficiencies. this meant removing burdensome regulations and legislative restrictions and eliminating wasteful government expenditures and distortionary tax and subsidy systems. the fourth, and final, principle called for trade liberalization. it was based on the premise that only through freer international trade can countries