carolyn rogers : financial stability in times of uncertainty remarks by ms carolyn rogers, senior deputy governor of the bank of canada, to young canadians in finance, ottawa, ontario, 22 november 2022. * * * introduction good afternoon and thank you to young canadians in finance for inviting me to be here today. it's great to see so many people here in the room and a warm welcome to those of you connecting virtually, from other chapters across canada. no matter where you're joining us from, i'm sure you've all been hearing a lot about the bank of canada in recent months. central banks around the world have been making headlines by rapidly increasing interest rates to get inflation under control. high inflation is something we haven't seen in canada in more than three decades, which means many in this room are experiencing it - and the stress that comes with it - for the first time. it's undoubtedly frustrating to face the uncertainty of inflation and the impact of higher interest rates at a point in time when you are just getting financially established - building your career, buying a house, starting a family. and as members of this organization, many of you may also be dealing with the broader impacts of tightening fiscal and monetary policy on financial markets as part of your day job. so, i am particularly glad to have the chance to meet with you today to talk about the bank's update on financial system stability. what i plan to do is give you a very high - level overview of why and how we monitor financial system stability at the bank of canada. i'll then touch on some of the global trends we're seeing that are affecting financial stability around the world and here at home. and finally, i will take a bit of a deeper dive into an area of financial stability that is currently on the minds of many canadians - housing. i'm aiming to keep my opening remarks short - about 10 minutes - to leave plenty of time for your questions. the importance of a strong financial system most central banks, including the bank of canada, have as part of their mandate the responsibility to monitor the soundness and stability of their country's financial system. financial system stability, like price stability, is crucial to the health of our economy. low, stable and predictable inflation contributes to sustained economic growth and prosperity. and a strong financial system - with solid institutions, robust payment systems and efficient markets - helps preserve savings, channel investment and facilitate payments. a weak financial system

of graduates, appropriately discounted, if that education is to generate positive gains to the economy ( assuming that a worker ’ s earnings equal his or her marginal productivity ). furthermore, if higher education generates positive returns to the economy, it ought to be financeable in principle, because either the state or the student should be able to borrow against future taxes or earnings. in practise, it may be difficult for a student to borrow against his or her future earnings because of financial market imperfections but that could be rectified though policy measures such as student loan guarantees. let us assume that the discount rate for the economy is 15 percent, which is approximately equal to the government ’ s average borrowing costs. this implies that, if the cost of higher education is spread over the working life of the graduate, graduates of higher education must earn approximately shs 3 million more per annum than workers with only secondary education. table 3 median monthly salaries by level of education of worker, 2012 / 13 education level median monthly salary ( shillings ) secondary 160, 000 post - secondary specialisation 310, 000 degree and above 610, 000 source : uganda national household survey 2012 / 13 table 4. 7 the 2012 / 13 unhs revealed that workers with a degree had median monthly earnings of shs 610, 000 which adjusting for inflation is equivalent to shs 800, 000 in 2017 prices ( table 3 ). comparing this with the median monthly earnings of shs 210, 000 ( in 2017 prices ) of a worker with only secondary education indicates that a graduate earns shs 590, 000 extra by virtue of having a higher education degree, the annual increment to income of higher education per worker is, therefore, shs 7 million. hence the annual gain in productivity and income arising from higher education is more than double its costs, discounted over a working life. this means that, in principle, it should be possible to finance the costs of higher education by borrowing against future earnings provided that all of the graduates of higher education can find employment in graduate level jobs. unfortunately, as i have already discussed, less than a quarter of higher education graduates are likely to be employed in graduate level occupations. this reverses the cost benefit ratio for higher education. if three quarters of graduates cannot find graduate level employment, the discounted benefits of higher education, in terms of increased productivity and incomes, are likely to be only about half of the total costs of providing higher education. in these circumstances, it is impossible to