stephen s poloz : release of the financial system review opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the financial system review, ottawa, ontario, 15 december 2015. * * * good morning. it ’ s a pleasure for senior deputy governor wilkins and me to be with you today to talk about the december issue of the bank ’ s financial system review ( fsr ), which we published this morning. let me take a moment to give some context for this report. the fsr highlights key financial vulnerabilities and some potential triggers that could turn those vulnerabilities into risks to the stability of canada ’ s financial system. the fsr is an essential complement to our monetary policy report – together, these two reports give the basis for a complete discussion of monetary policy within our risk - management framework. at our last interest rate announcement, we kept our key policy rate unchanged, as the economy was unfolding reasonably in line with our latest projection in october. we also said that risks to financial stability were evolving as expected. today ’ s fsr provides the analysis behind that assessment. our interest in financial stability risk has grown since the financial crisis, for two distinct reasons. first, the global regulatory architecture has been strengthened to prevent future crises, and how the system adapts to those changes needs to be well understood. second, persistently very low interest rates in response to the crisis are fuelling new financial vulnerabilities that bear constant monitoring. let me start with the financial stability implications of new regulations for financial intermediaries. the global financial system is clearly safer than it was before the crisis. this is important, for it means that vulnerabilities that appear worrisome today need to be assessed against a more resilient system. at the same time, our financial system is adapting to new regulations, and we must be alert for any new vulnerabilities that might emerge as a result. as one example, some observers contend that new capital and liquidity rules have led to reduced market - making in secondary fixed - income markets and may also be responsible for occasional liquidity shortfalls and market gaps. we analyze this vulnerability in greater depth in today ’ s fsr. in fact, it is proving very difficult to assess the liquidity issue empirically. most of the available data suggest that government - bond liquidity may have improved in recent years, but these data tell only part

twg ) on overseas filipino statistics to formulate the operational framework, concepts and definitions for overseas filipinos, this conference could clarify the differences in the sets of data currently available. second, on the remittance data. we have already seen the size of ofw remittances doubling within the last five years. with its growing importance to our economy, we need to place emphasis on its accurate measurement. we are aware that remittances are by themselves already inherently difficult to measure, since they are composed mostly of numerous small, frequent transactions, carried out by a multitude of transactors through a complex structure of originating and delivering agents here are also other measurement concerns including appropriately capturing remittances of non - resident ofws which are invested in financial instruments or physical assets such as real estate. moreover, a certain amount of remittances still flow through informal channels, which should be measured to determine the amount of global remittances. given the present range of remittance channels, and the expected increased complexity of the structure of service providers in the near future, accurate measurement of remittances remains a challenge for statisticians. we therefore need to collectively consider and design the best approach that will measure remittances in the most accurate and timely manner, going forward. this will not necessarily be an easy task. even at the international level, the conventional wisdom is that there is no unique “ best ” source of data, or collection approach, due to the complexity of the phenomenon. therefore, from a purely technical standpoint, a reasonable strategy would be to appropriately combine different sources and methods, e. g., bank reports data, household surveys, other administrative - based data, even econometric and demographic models, that will allow for integration, cross - checks and reciprocal confirmations. moreover, data on remittances should not be considered in isolation from data on stock of workers and deployment of overseas workers, as well as wage rates, wage increases and inflation in host countries. at the end of the day, there have to be reasonably explainable patterns and links among these variables that will allow for more informed economic analysis, decision making and policy - making by the government. on this note, highly commend the philippine statistical association for organizing this conference on the subject. we hope that this forum will serve as a catalyst for further statistical research and studies on the ofw phenomenon. we also thank the sponsors of this conference for their