the legislature considered that, in a small country like ours, whose human and material resources are bound to be limited, the way to achieve significant reinforcement of the resources allocated to financial stability is to develop substantial synergy between the various institutions concerned, in order to achieve the maximum economies of scale and to take the resources thus released and reallocate them to the basic functions of each institution. the law of 2 august 2002 provides that the rules governing the arrangements for pooling resources must be set out in a protocol concluded between the institutions concerned and approved by the king. without waiting for the official inauguration of the fsc, its members have agreed on a framework for exploiting synergy and have submitted proposals to the minister for achieving greater cooperation in regard to prudential policy and various support activities. the fsc has also set up a number of priority projects for the coming months, in particular the launch of a national coordination initiative on the subject of business continuity, which will take account, in particular, of the lessons which can be drawn from the events of 11 september 2001. in conclusion, i would simply say that this new committee and the far more historic institutions from which it emanates are firmly resolved that they will actively seek the solutions best suited to the general interest in the field entrusted to them, namely the field of financial stability.

' s, the effect of exchange rate movements on consumer prices has been less pronounced in recent years, when inflation was relatively low, than was the case in earlier years, when inflation was high. many other considerations go into our monetary policy decisions. we hear from the bank's regional offices across canada, which are in constant contact with canadian businesses. we look at the economic clues in the data on credit conditions, monetary aggregates, and some asset prices - though i should make it clear that we don't have targets for those aggregates or for asset prices. finally, we look at the expectations of financial markets. all of this information goes into our decisions, which always have the goal of aiming inflation at the 2 per cent target over the medium term. and as i said earlier, we are convinced that keeping inflation low, stable, and predictable is the best way for monetary policy to contribute to a healthy economy with strong and enduring economic growth. the case for flexibility but more is needed to ensure economic health. a doctor will tell you that, besides strength and endurance, healthy bodies need to be flexible. the same is true of an economy. financial policymakers not only need to encourage strong and sustainable economic growth, they also need to work on improving economic flexibility. at the outset, i spoke briefly about trade. removing barriers to trade is one important way of making an economy more flexible. we all know that freer international trade helps countries to more fully exploit the gains that come from increased competition and specialization. it is true that adjusting to freer international trade is not always easy. canada's economy had to make some difficult adjustments after the canada - u. s. free trade agreement came into effect in 1989 and after the north american free trade agreement added mexico to the group in 1994. both of these agreements sparked a great deal of domestic political controversy. many canadian companies were understandably concerned about their ability to compete. but despite initial misgivings, canadian companies rose to the challenge. some of the sectors that we used to protect the most - such as furniture, clothing, and wine - have since established a strong presence in international markets. overall, canadian exports have flourished. the success we have had strengthens our resolve to see freer trade extended beyond regional trading blocs. canada is hoping to see meaningful progress at the world trade organization's doha round of multilateral talks. clearly, agriculture is going to be a major hurdle. the developed countries, including all of us