market power among very few players. striking a balance between all these interests is not a simple task. but we should keep in mind that the level of competition can be maintained or enhanced by new entrants into the marketplace or by the threat of new entrants. i've also spoken about the need to promote efficiency in the regulation of securities markets. efficiency dictates that canada should have uniform securities laws and regulations based on principles that apply to everyone. the question is how to apply these laws and regulations in a tiered way to take into account the differing needs of issuers. all major provincial jurisdictions deal with issuers that vary greatly in terms of size and complexity — whether issuers are large, complex firms that want access to international capital markets, " mid - cap " firms that choose to access only canadian capital markets, or small speculative resource firms that have historically relied on canadian equity markets for financing. and the needs of investors are similar from one jurisdiction to another. so while the application of rules needs to take into account the size and complexity of firms, there is no need for different rules based solely on the province or territory of the issuer or investor. today, i want to bring canada's pension system into the picture. obviously, the health of the pension system is extremely important from the perspective of the people who rely on it for their retirement income. it is also important from the perspective of economic and financial market efficiency. a report to g - 10 deputies published in september emphasized that pension funds have already become the largest institutional investor class among g - 10 countries. it also noted that retirement savings and the related capital flows will have an increasingly important influence on financial markets. here in canada, policy - makers need to think about how our pension system can contribute to efficiency. there is a need for long - term investment in critical infrastructure to support canada's future 1 / 5 production capacity. and there are pools of pension capital that, given their very long - term investment horizon, can be invested in this manner. i will come back to this issue in a future speech. but in the balance of my remarks today, i want to look at the pension system itself and discuss the incentives under which these large pools of capital operate. we must allow these pools to be accumulated and invested so that they not only maximize returns to support future pensioners, but also maximize the future growth of the economy's production capacity. canada's pension system and risk there are essentially three

david dodge : economic and financial efficiency – the importance of pension plans remarks by mr david dodge, governor of the bank of canada, at the l'association des mba du quebec ( ambaq ), montreal, 9 november 2005. * * * over the past year, i have spoken a number of times on the topic of efficiency, and why it is so important for canadian policy - makers to keep in mind the goal of an efficient financial system. today, i want to talk about canada's system of pension plans and how they contribute to the efficiency of financial markets and of the economy as a whole. before i talk specifically about pensions, let me begin with a few words about financial system efficiency in general. what exactly do i mean by efficiency? an efficient financial system is one that helps to allocate scarce economic resources to the most productive uses, in the most effective way. an efficient financial system reduces the misallocation or waste of economic resources. this is important because, by making our financial system as efficient as possible, we maximize our chances of generating sustained economic growth and prosperity. at the bank of canada, we contribute to the goal of an efficient financial system in various ways. our monetary policy aims to keep inflation low, stable, and predictable. by doing so, we enhance the confidence of canadians in the value of their money, thus reducing their need to spend resources either anticipating or coping with inflation. we also contribute to efficiency through our role as overseer of major payments, securities, and foreign exchange clearing and settlement systems, and by providing liquidity in times of financial stress. by reducing risks to the safety and stability of the financial system, we increase certainty about the robustness of the system, which also supports efficiency. our semi - annual financial system review promotes awareness of financial system issues. as well, the bank works actively with financial market participants and regulators to develop and promote efficiency. and we conduct research that helps inform the decisions of policy - makers in terms of promoting this goal. in previous speeches, i've spoken about the need to support the efficiency of our financial institutions. canadian policy - makers need to develop a framework that continues to provide incentives for innovation and efficiency by encouraging competition. at the same time, canadian financial institutions may be able to find efficiency gains through economies of scale, which could flow across the economy in the form of lower - cost business and retail lending. however, other relevant public policy questions include foreign ownership and concerns about the concentration of