is globally competitive. and we have new and emerging areas of strength, including in green technology and electricity. - 12 to leverage these strengths, we need to invest in trade infrastructure and reduce trade barriers so that integrating canada into the north american value chain is more attractive for businesses. this includes investing in our electricity grid and transportation infrastructure. and businesses need to invest in new equipment and innovation to be globally competitive. as trade is recast for security or strategic reasons, canada is a trusted and reliable trading partner. canada is not going to be the cheapest alternative. but we have a highly skilled labour force, reliable energy and transportation networks and solid financial institutions. moreover, canada has a stable democracy and strong rule of law. and we provide a reliable and important voice at the global table. effective multilateral institutions that brings me to our second priority. we need to invest in effective multilateral institutions — they are more important than ever in this fragmented world. and they will be only as effective as members want them to be. it has never been easy to attain international economic cooperation, and open trade has come under particular pressure. but the trends i ’ ve just outlined increase the urgency. our common interest is shared prosperity. we all benefit from a stable, open, rulesbased global order. we need to build it, protect it, adapt it and ensure the benefits are shared. effective and legitimate multilateral institutions don ’ t just happen. they need good governance, adequate resources, talent and inspired management. canada has long invested in the bretton woods institutions. we have a strong voice at the imf and financial stability board ( fsb ). we know the value of an effective wto that can serve as a forum for negotiations, act as an arbiter of disputes and monitor the implementation of trade agreements. as canada assumes the g7 presidency in 2025, we have a responsibility to lead difficult discussions. that includes trade, global financial stability and mitigating climate change. as central bankers, our particular focus is the imf, the fsb and the international monetary order. we need to be sure that the international monetary and financial system is up to the task and is integrated with the other parts. the fundamentals of economics have not changed, but the need for resilience and agility has increased with changing economic circumstances. managing disruption finally, canada needs to be ready for the trade disruptions that seem inevitable amid a changing trade landscape. the bank of canada doesn ’ t

david dodge : economic and financial trends in canada opening statement by mr david dodge, governor of the bank of canada, to the house of commons finance committee, ottawa, 26 october 2004. * * * good afternoon, mr. chairman and members of the committee. we appreciate the opportunity to meet with this committee twice a year, following the release of our monetary policy reports. these meetings help us keep members of parliament and, through you, all canadians informed about the bank ’ s views on the economy, and about the objective of monetary policy and the actions we take to achieve it. since we last met, we are pleased to have issued canada ’ s new $ 20 bank note with enhanced security features. the new note began circulating on 29 september. last thursday, we released our october monetary policy report, which reviews economic and financial trends in the context of canada ’ s inflation - control strategy. when paul and i appeared before this committee last april, we told you that the economy was judged to be operating significantly below its potential. that is no longer the case, because the canadian economy has grown faster than was projected in last april ’ s monetary policy report and the july update. this stronger growth was largely due to a surge in exports. the economy is now operating near its production capacity and continues to adjust to global economic developments. the bank ’ s base - case projection for the period to the end of 2006 calls for aggregate demand for canadian goods and services to expand, on average, at about the same rate as potential output. given the effects of higher oil prices and the past appreciation of the canadian dollar, the bank projects economic growth to be slightly less than 3 per cent in 2005, and slightly more than 3 per cent in 2006. with the economy expected to remain near its production capacity throughout this period, core inflation is projected to move back up to the 2 per cent target by the end of 2005. that is the same projection that we made last april. however, given the path suggested by futures prices for crude oil, the bank expects total cpi inflation will rise to the top of the 1 to 3 per cent target range in the first half of 2005, before falling slightly below core inflation in early 2006. against this background, the bank raised its target for the overnight rate to 2. 5 per cent on 19 october. the base - case projection assumes further reduction of monetary stimulus over time, to keep the economy near its production potential and to achieve the inflation target. i want to emphasize that the