job with this. certainly the bank of france was successful in the early 1990s in building credibility as an inflation - fighting central bank. at that time, the bank of canada and the government of canada had come to a shared appreciation of the damage that inflation can do. so they made an important decision in early 1991. they announced a joint agreement to adopt explicit inflation - control targets. the agreement has been very successful in giving canada low, stable, and predictable inflation. it has been renewed three times — most recently for five years until the end of 2006. today, both the bank of canada and the european central bank are working to strengthen the economies in their jurisdictions. we both want to promote stable growth and rising living standards. and, importantly, we agree that promoting low and stable inflation is the best means to those ends. there are similarities between our inflation - control systems. for example, we both focus on inflation, and we both aim for price stability over the medium term. but there are also some differences that i want to highlight for you today. the bank of canada aims for price stability through its inflation target of 2 per cent. on the other hand, the european central bank has an inflation ceiling of 2 per cent, as measured by the harmonized index of consumer prices. this may look like a subtle difference, but it is important. for the bank of canada, 2 per cent is the midpoint of our 1 to 3 per cent inflation - control target range. it is a target, not a ceiling. our focus on that midpoint makes it clear that we run monetary policy in a symmetrical way. that is to say, we pay equal attention to any significant movement away from 2 per cent — whether above or below. when demand is strong, it can push the economy against the limits of its capacity to produce. this will tend to raise future inflation above its target midpoint. in these circumstances, the bank will raise interest rates to cool off the economy, and return inflation to the target. but this process also works in the other direction. when demand is weak, as we saw in 2001, this means that future inflationary pressures are likely to ease. so the bank will lower interest rates to stimulate the economy, absorb economic slack, and return inflation to the target. by working in a symmetrical way in response to surprises in demand, our inflation - targeting system helps to smooth the peaks and valleys of the business cycle. this promotes sound, and generally less variable, economic growth

global financial system. russia ’ s invasion of ukraine has increased our concern about cyber security. globally, state - sponsored cyber attacks have increased in frequency and sophistication since the war in ukraine began. that increases the risk of attack on a canadian bank, other financial institution or our financial market infrastructures. given the interconnected nature of financial markets, the impact of a successful cyber attack on one institution could spread to the broader financial system. the war has also further added to the level of uncertainty around the transition to a low - carbon economy. in the short term, it threatens global energy security, increasing the dependence on higher emitting fossil fuels like coal, and risks slowing the transition. over the medium term, transition uncertainty means that assets exposed to the fossil - fuel sector, including those found in the pensions and retirement savings of many canadians, are at risk of large and rapid repricing. we need better transparency about climate exposures by businesses and financial institutions. we also need clear transition plans by global policymakers. together these can help mitigate the risk of a disorderly and painful transition that hurts both our financial system and our economy. finally, cryptoassets are a growing vulnerability. more canadians are investing in cryptocurrencies. but the growth of these markets has outpaced global efforts to regulate them. like other speculative assets, cryptocurrencies are vulnerable to large and sudden price declines. and recently, some stablecoins — a type of cryptocurrency — have failed to deliver on their promise of stability. while cryptoassets do not yet pose a systemic risk to the canadian financial system, the lack of regulation means they don ’ t have the safeguards that exist for more traditional assets. and their risks may not be well - understood by investors. regulators around the world and in canada have recognized this risk and are working to address it. let me conclude by underlining that vulnerabilities are best thought of as weaknesses in the financial system. in normal times they may not have much impact. but large shocks can cause much more economic and financial damage when vulnerabilities amplify their effects. we have summarized the main vulnerabilities that are highlighted in the fsr. the report also outlines what is being done to mitigate them and to develop contingency plans because even the best planning can ’ t eliminate risk. it ’ s a very comprehensive report and offers just a snapshot of the work