mark carney : opening statement before the house of commons standing committee on finance opening statement by mr mark carney, governor of the bank of canada and chairman of the financial stability board, before the house of commons standing committee on finance, ottawa, ontario, 30 october 2012. * * * good afternoon. tiff and i are pleased to be here with you today to discuss the october monetary policy report, which the bank published last week. • the global economy has unfolded broadly as the bank projected in its july mpr. growth has slowed in all major regions. the economic expansion in the united states is progressing at a gradual pace. europe is in recession and recent indicators point to a continued contraction. • in china and other major emerging economies, growth has slowed somewhat more than expected. however, there are signs of stabilization around current growth rates. • notwithstanding the slowdown in global economic activity, prices for oil and other commodities produced in canada have, on average, increased in recent months. global financial conditions have improved, supported by aggressive policy actions of major central banks. sentiment, though, remains fragile. • in canada, while global headwinds continue to restrain economic activity, domestic factors are supporting a moderate expansion. following the recent period of belowpotential growth, the economy is expected to pick up and return to full capacity by the end of 2013. • the bank continues to project that the expansion will be driven mainly by growth in consumption and business investment, reflecting in part very stimulative domestic financial conditions. • housing activity is expected to decline from historically high levels. the household debt burden is expected to rise further before stabilizing by the end of the projection horizon. • there are upside and downside risks around the evolution of household imbalances. residential investment could regain momentum, thereby reinforcing existing imbalances. conversely, continuing high household debt levels could lead to a sharper - than - expected deceleration in household spending. in this context, canadian authorities are co - operating closely to monitor the financial situation of the household sector, and are responding appropriately. • canadian exports are projected to pick up gradually, but remain below their prerecession peak until the first half of 2014, reflecting weak foreign demand and ongoing competitiveness challenges. these challenges include the persistent strength of the canadian dollar, which is being influenced by safe haven flows and spillovers from global monetary policy. • after taking into account revisions to the national accounts, which had the effect of raising

strict conditionality, in an effort to avoid the imf stigma —, but also to the need to boost resources for crisis prevention and resolution. the latter need is clearly the rationale for the largest rfa, the european stability mechanism, created in the middle of the euro area sovereign debt crisis. as a result, the global financial safety net has expanded beyond the walls of the imf with limited coordination across its different layers. in short, the multilateral system has given way to a new decentralised and fragmented system, more prone to bilateral conflicts and managed by informal, non - binding commitments. reform is possible it should come as no surprise that without reform, the current system will be unable to provide satisfactory answers to global problems, to address externalities caused by unilateral actions, to ensure the enforcement of international ( non - binding ) agreements or to confront free - rider concerns. in other words, in the current context of new powers, new economic and geopolitical equilibria, and new challenges, multilateralism has to be adapted to ensure its survival. 6 these reforms should be pragmatic. viable solutions should first aim to establish frameworks that ensure the best feasible agreements are reached, implemented and enforced. the idea would be to support collective action in specific fields through various existing multilateral fora that are already working effectively. there are good examples of this course of action in the financial stability arena as shown by the work of the financial stability board7 or the basel committee on banking supervision. a similar model of collaboration could perhaps be tailored to the trade arena to unblock the wto. 8 that should allow progress on multilateral agreements, despite blocking positions in the current institutions. in this case, flexibility means the possibility of third parties voluntarily garrido, i., p. moreno and x. serra ( 2012 ), “ el fmi y los acuerdos regionales de financiacion ”, boletin economico, march, banco de espana, and ( 2016 ), “ the new map of international financial institutions ”, economic bulletin, january, banco de espana. johannes linn ( 2018 ) : “ recent threats to multilateralism ”, global journal of emerging market economies 9, 86 – 113. https : / / www. bundesbank. de / en / press / speeches / policy - evaluation - assessing - the - effects - of - post - crisis - financialsector - reforms - 79914