necessary for households and businesses to engage in the spending, saving, and investment that constitute economic activity, and one of the purposes of financial regulation is to ensure that wallace stegner, “ the american west as living space, ” university of michigan press, 1988. - 2banks continue to be able to serve this purpose. so it is my plan today to talk about the economy of the west and link the recent and future performance of the western economy to the central and supportive role banks play as vital infrastructure in their communities. defining the west let ’ s start by defining our terms. what do we mean by the west? before this audience, i approach this question with respect and a little caution, because i know that in a broad sense, it is what the center for the american west has been addressing since its founding. that aside, it makes sense to use a definition, as the center often does, that includes parts of states in the middle of the country whose economies, heavily dependent on natural resources, ranching, and farming, more closely resemble montana and new mexico than they do states on the eastern seaboard. nevertheless, for the purposes of these remarks, i am going to use a less expansive definition comprising the 13 westernmost states. i do so partly because this is a common definition of the west, and because it is the one used by the u. s. census bureau in dividing the country into four regions and this has helped me gather data for this speech more readily. ( figure 1 ) the first thing to mention that distinguishes the west from the rest of the country is apparent on this map - - land area. the west is large and would appear even larger of course, if it weren ’ t necessary to shrink the vastness of alaska to fit on one page. even using my more modest definition, the west still represents half of the land area of the united states. this is important in this context because of one theme i will be exploring today, which is the economy of the rural west and the banking services available there. - 3as this map should make plain, when we talk about rural america, to a significant extent we are talking about the rural west. another way to put it is that while the west is half of the united states geographically, it is only a quarter of its population. 2 eight of the 13 states in our definition of the west are among the dozen in the nation with the lowest population density. 3 even after subtracting the large

canada. the us economy has continued to steam ahead. there is a clear need for the pace of expansion in the united states to slow as we progress through this year and into 2001. prudent monetary management dictates that we in canada do not underestimate the upside risks for inflation, especially given the strong growth of aggregate demand in canada, the united states, and elsewhere. because of a lag of some 18 to 24 months in the effect of monetary policy on prices, the bank is always trying to anticipate inflationary pressures one to two years ahead. productivity growth is the only way to achieve long - term gains in incomes and living standards. the technological revolution that is currently sweeping the world provides canada with a golden opportunity to improve its productivity. the best contribution monetary policy can make to enhancing productivity is to provide a low - inflation environment. low and stable inflation reduces uncertainty about future price movements, lowers the incidence of boom - and - bust cycles in the economy, and helps keep interest rates down. all of this encourages investment in the equipment and software needed to take advantage of the new technology. canada ’ s inflation - control target and the bank ’ s commitment to maintaining that target, should ensure that monetary policy fosters a climate conducive to continued improvement in the performance of our economy.