##ime and alt - a mortgages. i am thinking specifically of collateralized debt obligations ( cdos ) that were themselves backed by other structured credit products, including the lower - rated tranches of private - label mbs. these so - called two - layer securitizations were far more complex and much more exposed to systematic losses than were the mbs themselves. indeed, investors in – and more importantly, financial institutions that retained – the super senior tranches of cdo - squared securities took substantial losses as the severity of the downturn in the housing market and in mortgage credit quality became evident. given the magnitude of those losses and the recognition that rigorous credit analyses are extremely information - intensive ( and very sensitive to assumptions about loss correlations ), i would expect investors to remain skeptical of two - layer securitized financial products for the foreseeable future. to the extent that larger tranches of simpler and more homogeneous securities might encourage broader information processing and credit analyses, they could play a role in rebuilding investor confidence. corporations that issue large amounts of bonds, for example, tend to be followed by quite a number of analysts. consequently, investors can access a wide range of information and opinions about those companies, providing a check – and less overall reliance – on credit analyses produced by the credit rating agencies themselves. in sum, an improved infrastructure for non - agency mbs should include comprehensive, loanby - loan data that are available in a standardized format that is readily accessible, but a robust data platform will not be sufficient. a new infrastructure will probably also include lesscomplex cash flow waterfalls, more homogeneous contract designs, and larger tranches of securities. with these features, the new infrastructure could increase transparency, and promote independent, objective credit analysis for the various classes of non - agency mbs. by facilitating detailed information processing and independent risk analyses, the reliance on credit rating agencies could be reduced, easing the way for investors to regain confidence in these securities and for liquidity to return in these valuable markets. that said, the recovery in the market for non - agency mbs – and, more broadly, for the origination of home mortgages that depend on these securities for funding – is bound to be a gradual process. it will take time to develop and implement a new infrastructure such as the one i have outlined, and for investor confidence to be rebuilt. in addition, investors could remain wary of re - engaging in the market for private - label mbs until they become convinced

stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 20 january 2016. * * * good morning, and thank you for coming today. let me begin as usual with a few remarks around the issues that were most important to the governing council ’ s deliberations. at the global level, 2015 was a little disappointing as the world dealt with diverging economic prospects and shifting terms of trade, but we expect gradual strengthening to resume in 2016. there has been considerable attention paid to recent developments in china, and this has added to volatility in global financial and commodity markets. however, it was governing council ’ s judgment that china will remain on its transition to a more balanced and sustainable growth path, from around 7 per cent annual growth to around 6 per cent. volatility in equity markets is, of course, not always a reflection of weak economic fundamentals. nevertheless, the global equity - market correction may inject a further measure of caution into business decision making. our global outlook remains positive, albeit cautiously so. governing council believes that the u. s. economy remains solid – the fourth quarter of 2015 was soft, but we believe this to be largely temporary for reasons we discuss in the monetary policy report ( mpr ). solid fundamentals, including strong employment gains, high consumer confidence and very strong investment outside the energy sector should see u. s. growth return to close to 2 1 / 2 per cent this year. not coincidentally, the canadian economy appears to have stalled in the fourth quarter. there were some temporary factors at work for us, too, but the main issue was slower exports to the u. s. we expect growth to pick up to 1 per cent in the first quarter, along with the u. s., and then to move back above 2 per cent for the remainder of the year. our new annual growth forecast for 2016 is 1. 4 per cent ; however, much of the downward revision in that figure is because of the weakness we saw in the final quarter of last year. on a fourthquarter - over - fourth - quarter basis, growth for 2016 is projected to be a more solid 1. 9 per cent. in its deliberations, governing council focused mainly on the implications of lower prices for oil and other commodities for canada and for monetary policy. this shock is