##ness and, more importantly, our productivity. household indebtedness let us start with household debt. since the beginning of the recovery, household credit has increased at twice the rate of personal disposable income. in the autumn of 2010, canadian household debt climbed to an unprecedented level of 147 per cent of disposable income ( chart 7 ). the relatively healthy financial condition of canadian households at the beginning of the “ great ” recession helped the canadian economy to better withstand the initial shocks of the crisis. however, going forward, it is essential to maintain the necessary room to manoeuvre to keep household spending on a viable path. this leads us to believe that the rate of household spending will more closely correspond to future earnings, and certain signs to that effect have already been observed. canada ’ s international competitiveness the second issue is our ability to compete internationally. the slow recovery of exports is due in part to the sluggishness of global economic activity. it is also due to the continued erosion of canadian business competitiveness over the past ten years. this erosion can be attributed to the appreciation of the canadian dollar and canada ’ s poor productivity performance. thus, canadian exporters are seeing their market shares for a wide range of goods drop in the u. s. market – by far the most important market for canada – while exporters in other countries, such as china and mexico, are gaining ground ( chart 8 ). bis central bankers ’ speeches as global economic growth continues to take root, we are seeing early evidence of a recovery in net exports. but, at this point, exports are still weak when compared with previous recessions. and in a world of growing international competition, we should not assume that the forces causing the erosion of competitiveness through the previous decade will simply fade away because of a global recovery. this situation highlights the need to diversify our export markets and increase our ability to compete, not only with american producers, but also with other foreign exporters. productivity and investment this brings us to the third issue. as i just discussed, international competitiveness is based on our ingenuity, the efficiency with which we produce, or, for short, productivity. but beyond its influence on international competitiveness, productivity is a fundamental determinant of our economic well - being. to improve productivity, we need investment. the slow recovery of investment in this cycle is particularly surprising in light of relatively favourable financial conditions : interest rates remain low, and the

##firmation that ibl has consolidated its position in its core banking business and now feels itself secure enough, confident enough and strong enough to spread its wings. the re - launch is also timely from a business viewpoint as it places the bank in a position to participate in the burgeoning capital market, which is now rivaling the traditional banking sector institutions as a preferred source of business financing. it will certainly help that the intercommercial trust and merchant bank would have the capital market experience of both jmmb and cmmb to rely on. over the last five years the value of sovereign bond placements in trinidad and tobago has amounted to more than $ 16 billion while private debt issues have amounted to $ 10. 5 billion over the period. also, with the rapid diversification of the economy, trade and project financing, commercial paper and various forms of structured finance typical of merchant banks, are increasingly becoming important sources of funding business activity. so there is a good case for a re - entry into merchant banking. however, merchant banking has its own challenges. as bankers, you know that dependence on diversified funding sources such as money market instruments and long - term foreign currency borrowings is invariably more risky than dependence on vanilla deposits. on the assets side, secured loans and advances, which are the standard fare of commercial banks, carry lower risk than the investments that are likely to dominate the balance sheets of merchant banks. in short, the shift to merchant banking will create demands for new competencies, new systems and new governance and risk management structures. as you know, the evolving structure of the financial system is also creating new challenges for the central bank as regulator. we are currently addressing these challenges through : ( i ) transforming our supervisory system into a more integrated risk - based framework ; and ( ii ) strengthening our overall legal and regulatory infrastructure, in line with international best practices. in particular, this implies, inter alia : ( i ) ensuring that institutions – big and small – have adequate governance systems in place ; ( ii ) insisting on enhanced reporting and disclosure standards ; ( iii ) putting in place procedures for the sharing of information with other regulators both locally and regionally ; and ( iv ) ensuring that financial institutions strengthen their risk management practices. in this context, the bank is working on amending capital adequacy rules to ensure that all major risks are appropriately identified and mitigated. i was very impressed by the mission statement of the intercommercial trust and merchant bank –