credible recovery and resolution mechanisms, including lenderof - last - resort policies, a deposit insurance scheme with risk - weighted premiums, and bridgebanking powers that enable the rapid closure of failing institutions and the swift re - opening of their viable operations. in its most recent budget, the federal government announced it will consult stakeholders on how best to implement a bail - in regime to recapitalize failing d. leung and s. cao, “ the changing pace of labour reallocation in canada : causes and consequences, ” bank of canada review ( summer 2009 ) : 31 – 41. d. amirault, p. fenton and t. lafleche, “ asking about wages : results from the bank of canada ’ s wage setting survey of canadian companies, ” bank of canada discussion paper 2013 - 1, february 2013. conference board of canada, compensation planning outlook 2013, october 2012. bis central bankers ’ speeches canadian banks that are systemically important to our domestic economy through the very rapid conversion of certain bank liabilities into regulatory capital. fourth, bank capital regulation is prudent. prior to the crisis, canadian capital requirements were higher than international norms thanks to osfi ’ s insistence that common equity form a large share of required capital. since the crisis, canadian banks have become considerably stronger. their common equity capital has increased by 80 per cent, or $ 77 billion, and they already meet the new basel iii capital requirements six full years ahead of schedule. finally, the entire financial framework is regularly reviewed and updated, in accord with the statutory requirement to renew the federal legislative and regulatory framework for the financial system every five years. this has proven invaluable given the pace of change in the financial system. in addition, canada ’ s regulatory system is subject to regular, rigorous external examinations. a massive and disciplined policy response allow me to review. the structure of the canadian economy, the risk sharing across the federation, labour market flexibility and financial stability together meant that canada could adjust quickly to the shock of the global financial crisis. it also meant that when canadian policy - makers responded, they were able to do so swiftly and massively. during the crisis, the bank of canada aggressively cut our policy rate until it reached onequarter of one per cent, the lowest it can effectively go. the bank then provided extraordinary guidance on the likely path of interest rates necessary to achieve the inflation target in order to maximise the monetary stimulus from its policy rate. canada ’ s inflation -

these issues. as job creation has absorbed slack in the labour market, we have started to see wages pick up. with respect to the impact of higher interest rates on housing markets and the economy, although it is still too early to make a full assessment, we have seen a deceleration in household borrowing. and while it ’ s also too early to tell how much additional potential output in the economy is being created, last week ’ s strong investment figures are encouraging. we will be providing a fuller assessment of potential growth, as well as of the neutral interest rate, in our april monetary policy report. conclusion allow me to conclude. all things considered, we decided yesterday that the current policy rate remains appropriate. while the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target. my governing council colleagues and i will remain cautious in considering future policy adjustments, guided by incoming data in assessing the economy ’ s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation. rest assured that, as always, the bank of canada will continue to do our part to ensure that we safeguard, and build on, the progress that has been made so far. 9 / 9 bis central bankers'speeches