a comprehensive financial reform agenda, coordinated by the financial stability board ( fsb ), to address the exposed weaknesses, to promote global financial stability, and to enhance financial and economic integration. since then, fsb member countries have made unprecedented progress on these objectives. canada and the united states have signed three major trade liberalization agreements over the past 50 years : the 1965 auto pact, the 1988 canada – u. s. free trade agreement and the 1994 north american free trade agreement, which also included mexico. the banking system did, however, require significant liquidity support because of the severe disruption to global funding markets. m. carney, “ exporting in a post - crisis world ” ( speech to the greater kitchener - waterloo chamber of commerce, waterloo, ontario, 2 april 2012 ). bis central bankers ’ speeches i ’ ll start with a brief overview of important reforms to the global banking system and to shadow banking — which refers to credit intermediation activities outside the traditional banking system — that have made the financial system as a whole safer. 4 then, i ’ ll zero in on two reform areas that need more work : global banks that are “ too big to fail ” and over - thecounter ( otc ) derivatives markets. finally, i ’ ll say a few words about a third policy issue that is critical for supporting financial integration — cross - border payments. reforming the financial system led by the g - 20, the fsb and the international standard - setters are developing and monitoring the implementation of the required regulatory standards. 5 their successful reform efforts have helped rebuild trust in financial integration that was severely damaged by the crisis. a significant accomplishment is the basel iii framework, which has made global banks much stronger and more resilient. the framework, which requires banks to hold more capital and liquidity and imposes a backstop leverage limit, has largely been finalized. 6 although the deadline for full implementation is not until 2019, many jurisdictions, including canada, are well ahead of schedule. 7 as for shadow banking activities, they represented key sources of financial instability during the crisis through faulty subprime mortgage securitization and runs on money market funds and repo markets. the fsb is creating a comprehensive approach to monitor and assess these non - bank credit intermediation activities. regulatory standards have been developed for several of the activities. for example, standards exist for securitization, specifically risk retention and disclosure ; money market funds, including liquidity and

initiatives taken at the federal level and in quebec and british columbia will add to canada ’ s gdp growth. however, the lowering of projected government spending in ontario is sufficient to more than offset all of these, so that fiscal policy now represents a net downward revision to our growth outlook for 2020, of about 0. 2 percentage points. governing council is of the view that monetary policy needs to maintain a degree of accommodation sufficient to offset these various headwinds until the economic outlook improves. the economy has slowed and some excess capacity has re - emerged, although this excess capacity is not generalized across the entire economy. indeed, the service sector remains very strong and is creating many new jobs, and there continue to be a lot of job vacancies. furthermore, global and canadian financial conditions have eased a good deal since our january report. for example, five - year fixed mortgage rates have declined by more than 60 basis points. all of this suggests that there is good reason to believe that the economy will pick up in the second half of the year. governing council therefore believes that this positive outlook is consistent with the current interest rate setting. in our rate decision, we chose to remove the reference to the need for interest rates to return into a neutral range, which we have revised to 2. 25 – 3. 25 per cent. we had originally added this reference to neutral to remind people what policy normalization could look like. in the current situation, we feel it is important to emphasize that we will continue to evaluate the appropriate degree of monetary policy accommodation as new data arrive. in particular, we are monitoring developments in household spending, oil markets, and global trade policy to gauge the extent to which the factors weighing on growth and the inflation outlook are dissipating. with that, senior deputy governor wilkins and i will be happy to take your questions. 2 / 2 bis central bankers'speeches