and innovation held at the ecb two years ago, we established that despite the financial crisis, the retail payments business has been resilient, providing reliable and regular revenues. before the crisis, the fact that the retail payments business is a substantial source of revenue in banking, accounting for up to 25 % of total bank revenues, was often neglected. now, the observation that banks with a balanced business model have been in a better position to cope with the crisis has led to a better recognition of the importance of retail banking and retail payments. still, despite their resilience and stable nature, retail payments revenues cannot be taken for granted. they are under pressure from different directions : increasing competition, substantial investment needs to keep up with customer demands and technological progress, and a more decisive stance on the part of competition authorities. with regard to the pricing of payment products, payment service providers have to face the paradox that on the one hand, they are being pressurised to ensure more price transparency, and on the other, direct pricing would probably result in an increase in pricing that would neither be accepted by the customers nor by the regulators. the financial crisis has not only led to a better recognition of the importance of retail banking and retail payments : it has also sharpened the focus on banking governance. in recent years, many banks were giving increasing priority to the interests of the shareholders. consequently, it can be argued that the interests of the clients, and thereby of society as a whole, slipped too much into the background. in short, the public service function of banks, which is particularly relevant in the field of payments and loans, has been neglected. now, it is time for me to hand over to the panellists. i am interested to hear your views on the key issues relating to the transformation process of the banking business, in particular as regards retail payments. what are the prerequisites for and barriers to successful integration in the field of retail banking and payments? what does an efficient retail payments market look like? which governance models are appropriate to steer the retail payments market? bis central bankers ’ speeches

david dodge : recent review of the canadian economy opening statement by mr david dodge, governor of the bank of canada, to the senate banking, trade and commerce committee, ottawa, 20 april 2004. * * * good morning, mr. chairman and members of the committee. as always, we appreciate the opportunity to meet with you twice a year, following the release of our monetary policy report. these meetings help us keep senators and all canadians informed about the bank ’ s views on the economy and about the goal of monetary policy and the actions we take to achieve it. the canadian economy continues to adjust to developments in the global economy such as stronger world demand, higher commodity prices, and the realignment of world currencies, including the canadian dollar. emerging - market economies, especially china and india, are contributing to intensified competition but are also creating new trading opportunities for canada. these developments require shifts in activity among sectors and create a need for adjustments by many businesses. monetary policy is facilitating these adjustments by supporting aggregate demand, with the goal of keeping the economy near its full production potential and inflation on target. when paul and i appeared before this committee last october, we told you that economic growth in canada was weaker than expected and that there was more slack in the economy than we had projected six months earlier. as you know, the canadian economy was affected by a number of shocks in 2003. thus, despite a broadening of the global economic recovery and higher commodity prices, it turned out that the economy at the end of the year was operating well below the level that we had projected in our october report. preliminary indications are that growth in the first quarter of this year was marginally below 3 per cent. thus, the bank ’ s view is that the economy is still operating significantly below its potential. our outlook for economic growth and inflation is essentially unchanged from that of the january monetary policy report update. the economy is expected to grow by about 2 3 / 4 per cent in 2004, picking up to about 3 3 / 4 per cent in 2005. this stronger growth is expected to come from private domestic demand, reflecting the current monetary stimulus in the economy and high levels of business and consumer confidence. such growth would return the economy to close to its production potential by the third quarter of 2005. core inflation - which removes the most volatile components of the consumer price index and the impact of indirect taxes on the remaining components - should average 1 1 / 2 per cent over the remainder of this year. as excess