remarks by toni gravelle deputy governor of the bank of canada cfa society toronto march 23, 2021 toronto, ontario ( via webcast ) market stress relief : the role of the bank of canada ’ s balance sheet introduction good afternoon. i always enjoy engaging with cfa charterholders, even virtually. 1 it ’ s hard to believe we ’ ve been dealing with covid - 19 for as long as we have. the past year has had a profound impact on people ’ s lives, both in terms of their health and their economic and financial well - being. canadians count on the bank of canada to make sure that the financial system works smoothly, especially in tough times when they depend on credit more than usual. so, a year ago, the bank took unprecedented actions to ensure that the financial system could keep functioning normally and the economy could recover. those goals are intertwined. markets have to work for the economy to work — not just for bankers and investment managers, but for canadians of all walks of life. an essential part of markets working well is liquidity : the ability to buy, sell, lend or borrow with relative ease. think of it as the grease that keeps markets lubricated. 2 cfa ( chartered f inancial analyst ) is one of the highest distinctions in the investment management prof ession. for more on the importance of liquidity, see t. gravelle, “ economic progress report : keeping markets working, ” ( speech delivered virtually to the greater sudbury chamber of commerce, sudbury, ontario, june 4, 2020 ). as well, for a summary of the bank ’ s response to the covid - 19 pandemic and how largescale purchases of financial assets fit into it, see p. beaudry, “ our quantitative easing operations : looking under the hood, ” ( speech delivered virtually to the greater moncton chamber of commerce, the fredericton chamber of commerce, and the saint john region chamber of commerce, fredericton, moncton and saint john, new brunswick, december 10, 2020 ). i would like to thank ron morrow, tamara gomes and tiago figueiredo f or their help in preparing this speech. not f or publication before march 23, 2021 13 : 15 eastern time - 2when covid - 19 struck last year, it caused enormous uncertainty about how the next weeks and months would play out. and whenever the economic outlook becomes extremely uncertain, market participants seek to hold cash. suddenly, investors large and small were

you can see that a lot can be done already. some measures might also be taken without huge or difficult legal changes. could you give us an example? our collateral framework, our platform where we are an operator, we have our payment systems, we are in the midst of discussing european framework for ccps — these are all areas where there is still time and where a certain amount of legislation is still under review, so we could add it. would you be ready to abandon your tips initiative in favor of a blockchain / dlt based solution? the conclusion to your stella project with boj says “ dlt - based solution could meet the performance needs of current large value payment systems ”? tips is 10 seconds, 0. 2 cents. dlt transactions are at best 30 euros and take at least one hour. why would we abandon tips? we have a mandate for efficient payment systems, and we go for efficiency. we are not bound to a technology, we are bound to results, and i think it ’ s the result that counts. as to the technology of dlt, we are testing it but there are so many unsolved questions in terms of governance and legal certainty in dlt. we are looking to what extent we could overcome these legal barriers, but we are at a very early stage. there seems to be a certain change of tone in how you and your colleagues now speak about digital currencies. in the past some of your colleagues largely dismissed it as, for example, tulip mania with no immediate consequences for the central bank. what prompted this bigger sense of urgency that something needs to be done right now? as long as it was negligible it was not considered a priority, but since this hype accelerated at the end of last year it has moved higher up on the agenda. if you see how fast something can develop, it can very quickly reach dimensions of past bubbles that also had negative effects on the economy. that we cannot ignore. the valuations are not at a level where you would now jump from your chair and say “ you need to forbid this thing ”. we are not there. but what i do not like is the public hype driving this thing. also the amount in icos is rather small. but this is market integrity, this is protecting the consumer. here you can ’ t say it ’ s also affecting monetary policy. one thing to remember is also that we target asset bubbles if they are a risk for financial