stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 22 october 2014. * * * good morning. carolyn and i are pleased to be here with you today to discuss the october monetary policy report ( mpr ), which the bank published this morning. as i ’ ve said in the past, the policy decision is not a mechanical one, so i ’ d like to provide some colour around the issues we are dealing with. i would also like to highlight some advances in our thinking since the last mpr. our outlook for the global economy continues to show stronger momentum in 2015 and 2016, but the profile has been downgraded since july. the good news for canada is that the u. s. economy is gaining traction, particularly in sectors that are beneficial to canada ’ s exports. and our exports do appear to be responding, with some additional help from a lower canadian dollar. our conversations with exporters indicate that they are seeing a better export outlook from the ground. however, it is clear that our export sector is less robust than in previous cycles. last spring, as you may recall, we identified which non - energy subsectors could be expected to lead the recovery in exports, and which would not. we have since investigated in more detail the subsectors that have been underperforming. after sifting through more than 2, 000 product categories, we have found that the value of exports from about a quarter of them has fallen by more than 75 per cent since the year 2000. had the exports of these products instead risen in line with foreign demand, they would have contributed about $ 30 billion in additional exports last year. by correlating these findings with media reports, we could see that many were affected by factory closures or other restructurings. in other words, capacity in these subsectors has simply disappeared. this analysis helps us understand a significant portion of the gap in export performance. our research also tells us that most of the sectors expected to lead the non - energy export recovery still have some excess capacity. our business outlook survey ( bos ) interviews indicate that while companies plan to invest in new machinery and equipment, few are planning to expand their capacity, at least so far. this helps explain why business investment might be delayed relative to what would be expected in a normal cycle. this

financial system suggest that much more needs to be done, both at the national and international level. barriers to financial inclusion continue to exist in many countries. these barriers include problems that relate not only to the physical access to financial services but also the high costs of the services and conditions that deter such access that result in disengagement in using financial services. policymakers can contribute in five significant areas in advancing the financial inclusion agenda. the first is to give clarity to the financial inclusion agenda, in addition to driving the national commitment to financial inclusion. this includes defining the goals for financial inclusion that needs to be broad based and comprehensive. universal access to basic financial services is desirable, but this needs to be differentiated according to the different segments within the economy. at one end of the spectrum, this may include those households and micro enterprises that will benefit from being brought into the economic mainstream while at the other end of the spectrum are those households and small and bis central bankers ’ speeches medium scale enterprises that are already in the economic mainstream but are disadvantaged because they are not able to participate effectively in the financial system. the goal should also be to achieve sustainable financial inclusion outcomes. secondly, policymakers have an important role in creating the right incentives and competitive environment for financial institutions to respond to the opportunities in financial inclusion. interventions by the government should not result in market distortions. as part of the regulatory regime is, however, the promotion of responsible behaviours to ensure access to financial services will be fair and at cost effective pricing. achieving the appropriate balance between these objectives can often be challenging, and different countries have approached this in different ways, with varying degrees of success. intervention needs to be consistent with competitiveness, stability and sustainability of the financial system. the third role for policymakers is to provide the enabling infrastructure that includes the mechanisms, systems, technology and institutional arrangements that will enhance the access to financial services. while technological advances have transformed the banking industry from a traditional “ bricks - and - mortar ” infrastructure to a system supplemented by electronic channels, the potential for greater use of technology to promote wider access to financial services still remains largely untapped. while mobile phone banking has been successful in enhancing outreach, the further use of it can substantially reduce the costs of extending the outreach of financial services. the other infrastructure that is important to support financial inclusion is having in place a sound payment and credit information system. the fourth is to evolve a comprehensive approach to consumer protection as an important complementary role to prudential regulation