to getting inflation back to target. if demand responds quickly to higher rates and inflationary pressures moderate, it may be appropriate to pause our tightening once we get closer to the neutral rate and take stock. on the other hand, we may need to take rates modestly above neutral for a period to bring demand and supply back into balance and inflation back to target. we will of course be updating our views on the outlook for the economy and inflation as new data come in, and we will continue to share our assessments so canadians can make informed decisions. let me conclude with a brief word on quantitative tightening. we expanded our balance sheet during the pandemic, first to help restore financial market functioning and provide liquidity to the financial system, and then to add further stimulus to support recovery. last november, we stopped increasing our holdings of government of canada bonds and have been in the reinvestment phase since then. today we announced that we are entering the next phase, quantitative tightening, or qt. effective april 25, we will stop purchasing government of canada bonds to replace our holdings as they mature, so our balance sheet will shrink. this will put upward pressure on borrowing costs further out on the yield curve, complementing the increases to our policy interest rate. let me stop here. senior deputy governor rogers and i will be happy to take your questions. 3 / 3 bis central bankers'speeches

in the years ahead, significant restructuring of the global economy is necessary. hence, i believe a more fundamental question to frame the discussion is : “ given the economic changes and challenges ahead, how do we make the global financial system more resilient and at the same time supports economic restructuring and sustainable global growth? ” 7. it is therefore critical to get the nexus between the financial system and the real economy right. in this regard, asia ’ s needs are likely to be different from those in the advanced economies. economies in rapid transition need responsive banking and capital markets. bankers need to appreciate the changing needs of the economy, build new capabilities and develop new products and services, to support the needs of companies, large and small, in both mature and new industries. the financial industry needs to build up capabilities to understand the requirements of new industries in the technology and services arena, and to efficiently fund long term infrastructure needs. to sustain asia ’ s growth trajectory, we need to further develop and deepen national financial systems and regional financial integration. mas is studying several ideas in these areas, and we look forward to working with our counterparts in the region and with the industry to advance this. 8. let me now share the measures that mas is taking to respond to the challenges from the international reform agenda and the evolving new financial landscape. our measures are based on three key pillars. sensible rules 9. the first pillar is establishing sensible rules. mas seeks to establish sound rules of a high standard that allows well - managed risk taking and innovation, and which emphasises the stable and sustainable development of the financial services sector. the effectiveness of a regulatory framework is not determined by whether it is stringent enough to prevent any kind of shortcoming or failure of any firm. neither is it determined by how dynamic and innovative the financial services sector is. a regulatory framework focused on stringency alone would impose undue costs and constrain innovation without the assurance that it would be effective. a regulatory framework focused on dynamism alone may not offer sufficient protection to investors, depositors and customers, and may experience more disruptive consequences in a crisis. 10. mas ’ approach to rule - making is outcome - focused. this recognises that the design of regulation should take into account market realities so that unnecessary disruption to wellfunctioning markets is minimised. for example, in current proposals for a new liquidity framework for banks, having too narrow a definition of acceptable liquid assets is likely to adversely affect the