volatility and very low interest rates, the instability becomes even more extreme. as a result, price and interest rate measures are likely to prove more reliable. many central banks have constructed summary measures to judge the ease or tightness of financial conditions in their markets. these financial conditions indices ( fcis ) are empirically based and include a number of different indicators, each weighted by its estimated impact on gdp growth. some representative indices for canada and other countries are shown in charts 2 and 3. although one shouldn't assign too much importance to a particular fci level, large changes in an fci probably indicate a significant easing or tightening. at the bank of canada, we have brought all of our credit measures together on a single web page. this collection, which we have dubbed our credit dashboard, can be viewed at : http : / / credit. bank - banque - canada. ca / index. php / about. as financial markets stabilize, interest rates out the yield curve ( particularly on government instruments ) would be expected to return to more normal levels. although it isn't a guiding principle, close coordination between the central bank and the treasury is also necessary. this will avoid confusion and help maximize the effectiveness of any measures that are taken to ease credit conditions and stimulate the economy. just as the boundary between monetary stability and financial stability becomes increasingly blurred in the midst of a financial crisis, so too does the boundary between monetary and fiscal policy actions. it isn't uncommon for both central banks and governments to initiate credit - easing measures, and it is important that the two work together. are unconventional monetary policies working? the basic question remains : does unconventional monetary policy actually work? there is good reason to believe that if these measures are implemented vigorously and with the clear support of authorities, they will be successful. initial results for the unconventional policies recently employed by canada, japan, the euro zone, the united kingdom, and the united states are certainly promising. however, any assessment of the effectiveness of these measures must necessarily be treated with considerable caution. • first, these are early days, and we don't have a great deal of evidence to draw on. • second, several policies are often initiated simultaneously, so it is difficult to gauge the impact of any particular one. • third, spillover effects from one market to another could be significant but difficult to detect. • fourth, short - run and long - run effects could differ enormously and will depend importantly on the initial conditions

begin with a few comments about recent economic developments, and the remedial policy actions that have been undertaken. recent economic developments a g - 7 colleague has cleverly summarized the experience many of us are living these days as " redesigning an airplane while flying it. " sometimes it may feel this way ; however, this does not do justice to the coherent policy frameworks and careful planning that help guide many of the policy measures that we are implementing. the unprecedented economic times in which we live and work have forced us to be increasingly creative. every major industrial country is now in recession, as are many emerging - market economies. those emes that are still growing have witnessed a marked deceleration in real economic activity, and any hopes of " decoupling " have long since disappeared. concerns about stagflation, which dominated policy debates as recently as eight months ago, have largely dissipated, replaced by concerns of deflation. headline inflation in advanced economies has fallen dramatically, reflecting the collapse in commodity prices and widening output gaps, and is expected to dip briefly below zero in many countries. it is important to note that despite the dire news, a recovery is still in prospect, aided by aggressive policy actions. the bank of canada recently published its spring monetary policy report, where we outlined our views on current economic conditions and the near - term outlook. in a special annex to the report, we also presented a framework for unconventional monetary policy and how this could be applied, if necessary. these are exceptional and unsettling times ; anything that can be done to reduce uncertainty and instill confidence is particularly welcome. it was with this in mind that the bank of canada decided to add the special annex to its last report. our framework for conventional monetary policy, based on a flexible exchange rate, an explicit inflation target, and clear accountability has served us well, and will continue to guide our future actions. the annex builds on this foundation, providing a clear contingency plan for unconventional measures and for dealing with some extraordinary challenges. monetary and fiscal policy responses policy - makers in canada, the united states, and elsewhere have moved with exceptional speed and determination to support financial markets, restore growth, and re - equilibrate the real economy. authorities have provided extraordinary assistance to the financial sector in the form of emergency liquidity, balance sheet guarantees, asset purchases, and recapitalization as appropriate. ambitious and concerted discretionary fiscal measures have also been initiated and, together with automatic fiscal stabilize