investor. 4 / 5 conclusion in closing, let me say that i hope you've found my comments to be topical. many important decisions about our regulatory framework are currently being considered, and these will profoundly affect the canadian economy. in making those decisions, it is very important that policy - makers keep in mind the goal of efficiency. they can support this goal by promoting competition, by correcting market imperfections where practical, and by promoting financial stability through reduced systemic risk. but it is even more important to remember why the goal of efficiency must be followed. ultimately, policy - makers must strive to provide the best possible environment for achieving optimal allocation of economic resources. this is how policy - makers and regulators of the financial system can best serve the public and contribute to sustainable economic growth and prosperity in canada. 5 / 5

david dodge : financial system efficiency - getting the regulatory framework right speech by mr david dodge, governor of the bank of canada, to the toronto cfa society, toronto, 22 september 2005. * * * i am happy to have the opportunity today to follow up on a speech i gave here in toronto last december. in that speech, i talked about the need for canada to improve its financial system efficiency. today, i want to focus my remarks on how regulation can, and must, contribute to that important goal. when i talk about an efficient financial system, i mean a system that helps to allocate scarce economic resources to the most productive uses. by making our financial system more efficient, we can help generate sustained economic growth and prosperity. the bank of canada has been contributing to the goal of an efficient financial system in a number of ways. the bank's monetary policy aims to keep inflation low, stable, and predictable. by doing so, we enhance canadians'confidence in the value of their money, thus reducing the need for people to spend resources either anticipating or coping with inflation. we also contribute to efficiency through our role as overseer of major payments, securities, and foreign exchange clearing and settlement systems, and by providing liquidity in times of financial stress. by reducing risks to the safety and stability of the financial system, we increase certainty about the robustness of the system, thus supporting efficiency. our semi - annual financial system review promotes awareness of financial system issues, looks at developments and trends in the system, and addresses issues that affect its safety, soundness, and efficiency. as well, the bank works actively with market participants and regulators to develop and promote an efficient financial system. and we conduct research that helps inform the decisions of policy - makers in terms of promoting this goal. today, what i want to talk about is how policy - makers can support efficiency by getting the regulatory framework right. i will start with some brief remarks about regulation in general. i'll then discuss how our regulatory framework can support financial system efficiency, and how we can best make sure that our framework is an effective one. i'll conclude with a look at some current issues in financial system regulation and the various ways in which the bank is involved in them. how regulation can promote financial system efficiency let me start with a basic premise. for any market economy to operate efficiently and achieve an optimal allocation of resources, there needs to be a solid legal and regulatory framework. basic legal concepts, such as