chances that monetary policy will be constrained by the lower bound on interest rates. but recovering from a shock like the global financial crisis can be a long drawn - out process – just as it was in the 1930s – as consumers and businesses repair their balance sheets and rebuild their confidence in the future. ultimately, i see this as a cyclical issue, not a secular one, although the cycle is proving to be longer than usual. more to the point, i take issue with the word “ stagnation. ” the world ’ s policy - makers put in place measures to mitigate the damage of the crisis and prevent the worst. we have strengthened our financial architecture to protect against future crises, and the system is still adjusting. growth has been slow, but it hasn ’ t been non - existent. many of those policies remain in place, sustaining growth and avoiding stagnation until such time as keynes ’ s animal spirits, which have been crushed over the past seven years, revive. bis central bankers ’ speeches no matter where you stand on the issue, it ’ s clear that the expansion in the developed world is slower now than it was in previous decades, and it will probably remain that way. this is because population growth is slowing as the positive impact of the post - war baby boom is mostly behind us now. however, economic progress can still come through productivityenhancing technologies, which historically have defied prediction. and there is a plethora of structural policies that can raise trend economic growth – such as trade liberalization or labour market reform – which are being actively discussed by the g20. in the bank ’ s last monetary policy report ( mpr ) in october, we forecast that the canadian economy would return to positive growth in the second half of this year, and that annual growth would continue to increase in 2016 and 2017. that would see the economy use up its excess capacity, and return inflation sustainably to the 2 per cent target, around mid - 2017. so far, that forecast seems to be playing out, as we said in our interest rate announcement last week. beneath the surface, however, our economy faces a complex and lengthy adjustment to lower resource prices – an adjustment that will unfold over the next several years. while the resource economy works through this adjustment, the non - resource economy should continue to gather momentum, driven by improved export performance. this will be followed by rising investment, growth in the population of companies and a steadier trend in new job

sector might cause important and risky business activities to be shifted into less regulated areas such as shadow banking entities. competitive distortions could also arise from a failure to establish a genuine single rule book and from the discretion that national authorities maintain regarding, for example, the implementation of macroprudential tools. notable national differences in supervision might therefore remain in place ; in other words, the playing field would then not be completely level. on the other hand, it may be argued that there should be scope for some degree of differentiation below the euro area level. after all, different cultures and languages will continue to exist within the euro area. in the same vein, the question remains if the new supervisory system is apt to address national problems properly. for instance, there will still be national or local financial cycles, as has been the case for business cycles to this day. as small banks will remain within the remit of national supervisory authorities, there will in any case be the need for a two - tier supervisory regime. banking union will not only affect relationships among the various players within the euro area, but also relationships with players outside the euro area. the fact that banking union currently only covers the euro area may give rise to competitive concerns. to be sure, all eu countries can be expected to benefit indirectly from banking union via a more stable financial system in the participating countries. but let me stress here that it would be in the interest of all if as many countries as possible decided to join. banks domiciled in countries that opt to join will enjoy the reputational gains from being subject to the same supervisory standards as their euro area peers, which might for instance dampen risk premiums on their debt. obviously, this might encourage a number of central, eastern and southeastern european countries which are not ( yet ) part of the euro area to join banking union. to conclude, centralizing banking policy at the european level undoubtedly constitutes a milestone in deepening and completing the euro area ’ s economic and institutional integration. at the same time, banking union is of course no panacea, and in itself does not bis central bankers ’ speeches solve the problems surrounding banks. furthermore, the problems of the banking sector were by no means the only reason behind weak growth, rising government debt or fragmentation in the euro area. banking union can therefore only be one – albeit an important – element in the overall set of measures which are instrumental in putting the future development of the euro area on a more sound economic and institutional footing.