sense of urgency to address lessons that can be learnt from the crisis. much remains to be done, especially in imf global financial stability report ( gfsr ) - navigating the financial challenges ahead dated october 2009. strengthening risk management. each of us, as regulators, as industry participants, as research institutes, academics and researchers, has an important part to play. role of regulators first, there is need for global regulatory reforms. mas is involved in discussions at the financial stability board, the basel committee on banking supervision and other fora to consider proposals to strengthen the regulatory framework. let me highlight two key areas of focus : regulatory capital framework and liquidity risk management standards. the crisis occurred on the back of aggressive risk taking and leveraging. risks had been under - estimated and in many cases, financial institutions were over - reliant on external credit ratings and on quantitative models. risks were built up both on and off the balance sheets of banks. when these started to materialise, the de - leveraging effects and the steep fall in asset prices resulted in liquidity seizures in asset and funding markets. this caused major losses and writedowns of bank capital. in many cases, costly government intervention was needed to keep the financial institutions from failing. to improve the resilience of banks, global regulators have agreed to raise the levels and quality of bank capital. additional capital for trading book and for securitisation risks will be needed. there are on - going discussions on establishing a framework for countercyclical capital buffers and raising the quality, consistency and transparency of the tier 1 capital base. other supplementary tools to contain the riskiness of banks, such as a leverage ratio are also being developed. to address liquidity concerns, regulators are considering the introduction of a minimum global liquidity standard that includes a stressed liquidity coverage requirement underpinned by a longer term structural liquidity ratio. mas is involved in the discussions on both the capital and liquidity proposals and supports the broad thrust of these initiatives. as mas ’ regulatory framework has generally been regarded as conservative, we are in a good position to comfortably adopt these more stringent standards. however, we are aware that more regulation on its own is not a panacea. it would be undesirable for the regulatory pendulum to swing towards extreme conservatism and for over - prescriptive rules to severely restrict financial innovation. mas will adopt a balanced approach and will work closely with and consult all stakeholders

markets, rather than be artificially suppressed by forward guidance. conclusion allow me to conclude. as we have seen, well - anchored inflation expectations reflect the unwavering pursuit of our inflation goals. they show that market participants continue to believe both in our commitment and our ability to return inflation to its target. unconventional monetary policies have played a key role, in canada and elsewhere, in promoting growth and helping to meet our inflation goals. as the global economy shakes off the great recession, and the era of unconventional policies comes to an end, a return to ultra - low levels of financial market volatility is unlikely. bouts of increased volatility can be expected as guidance - influenced positions are unwound and as markets react to shocks. as we go through the normalization process, this represents the natural reaction of financial markets to economic uncertainty and a return to a normal trading environment – not an erosion of central bank credibility. the bank of canada will continue to pursue and fulfill our inflation - targeting mandate. we will continue to follow the policies necessary to ensure a timely return of inflation to target while being mindful of financial stability considerations. this process takes place in an uncertain world where shocks happen daily, behaviour shifts repeatedly, and our analytical tools and models can offer only rules of thumb. in that sense, monetary policy is a very imprecise business – less like engineering and more like risk management. ultimately, our credibility will hinge on how well we meet our mandate over extended periods of time. i ’ m confident that we will continue to get the job done. bis central bankers ’ speeches