remarks by stephen s. poloz governor of the bank of canada eric j. hanson memorial lecture university of alberta may 25, 2020 edmonton, ab monetary policy in unknowable times introduction it is an honour for me to deliver the eric j. hanson memorial lecture for 2020. i want to thank the university of alberta for the invitation and for your flexibility and perseverance in these difficult and unusual times. eric hanson was a great economist and albertan whose pioneering work on public finance helped define the canada we know today. the lecture series established in his memory has seen contributions from some very important names in canadian economics and public policy, such as thomas kierans, judith maxwell and kevin lynch, to name just a few. the bank of canada has been involved with this lecture series almost from the beginning. i was working at the bank in 1988 when then - governor john crow delivered the second - ever hanson lecture. crow cemented the idea that price stability should be the prime mission for the central bank because it is the best contribution monetary policy can make to our economic well - being. that lecture laid the foundation for inflation targeting — the highly successful monetary policy framework now practised in canada and virtually every advanced economy. david dodge would follow john crow 20 years later, at a time when the global economy was poised on the edge of crisis. dodge questioned whether inflation targeting really did represent the end of monetary policy history, despite the bank of canada ’ s success in meeting its objectives. as dodge rightly pointed out, our knowledge remains very limited, and monetary policy - makers should always approach their task with humility and crossed fingers. five years later, mark carney would be the third bank of canada governor to take this stage, discussing the lessons policy - makers learned from the 2008 – 09 global financial crisis — including the need to understand how monetary policy interacts with other macroeconomic policies. i am grateful for the opportunity to join this distinguished list. when the possibility of delivering this lecture first arose last year, i knew that i wanted to talk about uncertainty as it relates to the conduct of monetary policy. after all, the past seven years have been marked by several major events that have forced policymakers to confront unprecedented uncertainty — unprecedented in both i would like to thank sharon kozicki and paul badertscher for their invaluable collaboration in preparing this lecture. not for publication before may 25, 2020 13 : 30 eastern time - 2magnitude and origin. economists, including

bis central bankers'speeches cash is an old and simple payment technology. it has stood the test of time because it has several important advantages. first and foremost, cash is safe. it is legal tender with a relatively stable value and is widely accepted for payment. it also establishes confidence in the banking system. a bank ’ s customers can be reassured that, any time they want, they can convert their deposits into cash. furthermore, cash is universally accessible. anyone can use it, including people who don ’ t have bank accounts. perhaps not surprisingly, then, cash is very important to those who may face challenges accessing alternative payment methods — such as the homeless and those living in remote communities. cash is resilient — it works even when computer systems go down or during a power failure. it is private — you can buy everyday goods and services without revealing your identity or your personal or financial information. cash also preserves an element of competition in the financial system, by providing a cheap and reliable alternative to credit and debit cards. all this being said, cash also has its limitations. it is more suitable for relatively low - value payments because of the obvious security risks of carrying around large volumes of cash. and it cannot be used to make purchases remotely. with this background in mind, i would like to discuss some issues that canada ’ s payment ecosystem is currently facing. changes and challenges recent advances in technology offer opportunities to improve our core payment infrastructure. we have seen this at the retail level, with contactless “ tap and go ” payments, mobile banking and other innovations. the structure of our economy is also changing, with transactions increasingly taking place online. partly reflecting these innovations, we are seeing a steady decline in the use of cash in retail transactions. in a 2017 bank of canada survey that asked canadians how they pay for goods and services, respondents said that they use cash for about one - third of their transactions — compared with more than half just a decade ago. and about 1 in 10 canadians now claims to be entirely “ cashless. ” 1 in some countries, such as sweden and norway, the use of cash has declined to a level where merchants are finding it too costly to accept cash, and banks are scaling back their processing services. i ’ ll talk later about how we can maintain access to cash, particularly for those “ unbanked ” or “ underbanked ” members of our society. in addition to these trends driven mainly by technology, globalization has put the spotlight on