agathe cote : financial risks and global reforms remarks by ms agathe cote, deputy governor of the bank of canada, to the financial markets association of canada in association with women in capital markets, toronto, ontario, 28 june 2011. * * * introduction good afternoon. i want to thank our hosts, the financial markets association of canada and women in capital markets, for the invitation to speak to you today. i am very pleased to be here. last week, the bank released its financial system review ( fsr ), a semi - annual publication in which we summarize the main risks to the stability of the canadian financial system, and the policy actions required to mitigate those risks. this issue of the fsr also includes three articles that focus on issues related to financial markets. today, i am going to devote the largest part of my presentation to one of those articles, which discusses shadow banking, or what we at the bank prefer to call market - based financing or mbf. 1 we favour this term because it highlights the fact that the creditintermediation activities that constitute shadow banking – such as securitization or repurchase agreements – are conducted primarily via markets. if properly monitored and regulated, these activities can bring significant economic benefits and do not have to be “ shadowy. ” the agenda for global financial reform that was launched by the g - 20 at its london summit in 2009 has, to date, been primarily directed at the banks. banks are the core of the global financial system, and governments and central banks in many countries had to intervene heavily to support them during the crisis. but the financial crisis has shown that mbf activities can also be an important source of systemic risk. moreover, with the standards applied to banks set to increase with basel iii, the incentives for activities to migrate to shadow banking may increase. for these reasons, the international financial reform agenda, under the auspices of the financial stability board ( fsb ), is now turning its attention to this area. in my remarks today, i will describe the key characteristics of the mbf sector, examine potential risks associated with it and discuss the policy options being considered to address these risks. i will conclude with comments on an important aspect of the reform agenda for this sector, which is the move to strengthen market infrastructure through greater use of central clearing services for derivatives and repo transactions. first, however, i want to start with a brief summary of our assessment of the key risks to canada

mark carney : opening statement for appearance before the standing senate committee on banking, trade and commerce opening statement by mr mark carney, governor of the bank of canada, to the standing senate committee on banking, trade and commerce, ottawa, ontario, 22 june 2011. * * * good afternoon, mr. chairman and committee members. tiff and i are pleased to appear today to discuss the bank of canada ’ s analyses of the economic outlook and the stability of the financial system. we look forward to your questions and the discussion that follows. the bank ’ s most recent comprehensive assessment of the economy was presented in its april monetary policy report ( mpr ). on 31 may, the bank issued its latest policy rate announcement. these provide the basis for my comments today. please bear in mind that the bank ’ s next full economic analysis will be published in the upcoming mpr, which will be released on 20 july 2011. i will also take a few moments this afternoon to outline the highlights of the bank ’ s financial system review ( fsr ), which was released just this morning. the fsr reviews developments in the financial system and identifies potential vulnerabilities. beginning with the economic outlook : the global recovery is proceeding broadly as we had expected in april. the u. s. economy continues to grow at a modest pace, limited by the consolidation of household balance sheets. growth in europe is maintaining momentum, although the risks related to peripheral economies have clearly increased. the disasters that struck japan in march are severely affecting its economic activity and are also causing temporary supply chain disruptions in advanced economies, including canada. although commodity prices have declined recently, they are expected to remain at elevated levels, supported by tight global supply and very strong demand from emerging markets. these high prices, combined with persistent excess demand conditions in major emerging - market economies, are contributing to broader global inflationary pressures. despite the challenges that weigh on the global outlook, financial conditions remain very stimulative. in the short term, economic growth in canada is expected to slow to modest rates, due to a number of temporary factors. these include the supply chain disruptions that will dampen automotive production, as well as the drag from adjusting to higher energy prices on consumer spending in canada and the united states. overall, a broad rebalancing of demand in canada is underway as the economic expansion progresses. business investment is now growing strongly, and contributions to growth from both household consumption and government spending are dimini