individuals and businesses to thrive. in practice, this means that those working in government must have the right incentives to provide the appropriate framework - one that facilitates higher productivity and innovation in the private sector. the flip side of the coin is that we should also have the right incentives for the private sector to work towards enhancing the public good and the productivity of collective action by governments. the bottom line is that we cannot afford to have the private and public sectors operating as two solitudes. to work efficiently, individuals and businesses need a well - functioning public sector and the appropriate framework that provides the right incentives. the public sector has a responsibility to understand how businesses and individuals work in order to provide the appropriate setting and support. while this applies to all parts of the public sector, it is perhaps most critical for those who are responsible for the country ’ s economic and financial framework - including us at the bank of canada. creating and maintaining this framework, in the context of a changing global environment, will be a daunting challenge indeed. part of that challenge will come from developing a public policy framework that has two dimensions. first, it must have enough consistency with the rest of the world so that we remain open to competition and to the flow of ideas from abroad. second, our policy framework must create unique strengths for canada so that our public sector is a source of competitive advantage and does not detract from our other advantages. what does this mean for students in terms of opportunities for tomorrow? it means that you should be thinking of careers that combine public and private sector experience, as well as academic. the lessons you learn in one place will give you a greater ability to work and contribute elsewhere. and this diversity of experience will give you a set of skills that you will find are in great demand. and it really doesn ’ t matter where you begin. for example, if you want to make a real contribution as an academic, some experience in either the private or the public sector will be tremendously important in letting you bring more to the table as a teacher. in the private sector, academic or public sector experience will let you view the world strategically, which is difficult if your experience is confined to just one firm or industry. and if you want to contribute in the public sector, as i have already said, it is extraordinarily important to have private sector experience so that you can better understand how business functions. why? because, in the end, public policies must foster the effective and efficient

just as much about inflation falling below target as we do about inflation rising above it. this symmetric approach helps keep the canadian economy near its production potential, thus encouraging strong, sustained growth in output and employment. i'm not arguing that all countries should copy every detail of our inflation - targeting regime. but it is important that central banks follow policies that anchor inflation expectations and thus prevent a buildup of deflationary as well inflationary pressures. as i mentioned before, both canada and the united kingdom operate with a flexible exchange rate. much has been said recently about floating exchange rates in relation to certain asian economies — china in particular — and global imbalances. the policies of some asian economies to encourage export - led growth, including the fixing of their exchange rates to the u. s. dollar, have caused a buildup of large foreign exchange reserves, thus exacerbating global imbalances. it's important to point out that, in theory, there is nothing wrong with countries having fixed exchange rates. but in practice, there is a major problem. through " sterilization, " certain asian countries — including china — have been trying to offset the domestic price effects of their foreign exchange intervention. this is inhibiting economic adjustment. at the bank of canada, we have argued that it is very much in china's own economic interest to float its currency. by having a flexible currency, china could gear its own monetary policy to its own domestic considerations. if the external value of the renminbi were allowed to rise, the global purchasing power of chinese citizens would also rise. this, in turn, would help to spread the gains from integrating into the world trading order throughout chinese society and would allow that country to boost its consumption, thus helping to resolve global imbalances. floating exchange rates are not the whole answer to the problem of global imbalances, but they are an important part of the solution. as i just said, when countries offset the effects of intervention, they delay domestic economic adjustment. they also delay global adjustment. just as worrying, such intervention is provoking threats in certain political quarters of protectionist measures. such wrong - headed measures could choke off the growth of international trade that has led to rising incomes worldwide. and so it is very important that all countries work to protect and enhance the free flow of goods and services by pushing the doha round of trade talks to a successful conclusion, and by strengthening the world trade organization to ensure proper compliance with the