mark carney : addressing financial market turbulence remarks by mr mark carney, governor of the bank of canada, to the toronto board of trade, toronto, 13 march 2008. * * * since last summer, many of us here today have been preoccupied with the ongoing dislocations in financial markets. what began in securities linked to u. s. subprime mortgages has spread to a broad range of structured assets, conventional credit markets, and, to a lesser extent, equities. as a consequence, some of the world's largest financial institutions have recorded substantial losses, the cost of borrowing has increased, and the availability of credit has decreased. more than seven months on, the end is not yet in sight, although it is safe to say that we have reached the end of the beginning of this turmoil. this is not because the dislocations in markets have eased ; in fact, strains in financial markets have intensified recently, but rather because we are entering a new phase where policy - makers and market participants have a better understanding of both the shortcomings in the current financial system and what needs to be done – by both groups – to address them. this response is important for all economies. even though most of the practices that contributed to the crisis took place beyond our borders, and our financial institutions are in comparatively robust health, canada is not isolated from global events. some of our institutions have suffered losses, and our economy is beginning to feel the effects of the deterioration in global financial conditions. moreover, going forward, national markets will be judged by new standards of liquidity, transparency, and the greater integrity that comes from properly aligned incentives. our institutions will have to compete in that environment. in my remarks today, i would like to discuss briefly three of the factors behind the market turbulence and then outline corresponding priorities for the official sector and market participants. this list is far from exhaustive, but i chose these three because they are among the most important, and because efforts are now under way – in both the public and private sectors – to address them. causes of the turbulence recent events represent an overdue repricing of risk ; the direction of which was predicted by many and desired by some. 1 however, the speed and virulence of the repricing has illustrated the adage " be careful what you wish for. " while the repricing was triggered by significantly higher - than - expected defaults in u. s. subprime

- makers and business leaders cannot ignore. conclusion we know that the challenges facing our economy will not be easy to meet. we know that tough choices will have to be made to secure an economic framework that enhances ontario ’ s efficiency and its flexibility. we know that the burden of adjustment will fall disproportionately on some individuals and groups and that we have a collective responsibility to help with that adjustment. but we also know that canadians and ontarians have made tough choices in the past that have proved right. these choices have yielded an economy that is resilient, and capable of competing with the best in the world. that tradition must continue. the choices ontarians make in the years ahead will determine our ability to meet the challenges thrown at us by this changing world economy, and to seize the opportunities that growth in world markets will bring. this province has tremendous human and natural advantages. i am confident that it also has the will to make the choices that will help ontario thrive in this new world economy.