tiff macklem : release of the monetary policy report opening statement by mr tiff macklem, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 27 october 2021. * * * good morning. i ’ m pleased to be here with you — in person — to discuss today ’ s policy announcement and the bank ’ s monetary policy report ( mpr ). it seems fitting that we are back together in this somewhat normal setting as we conclude one part of our extraordinary monetary policy response to this pandemic. this morning we announced that we are ending quantitative easing ( qe ) after more than year and a half. we undertook qe first to help restore market functioning and then to boost our monetary policy stimulus. since last october, in line with progress in canada ’ s economic recovery, we have been gradually reducing the pace of our qe purchases. with the economy once again growing robustly, governing council judged that qe is no longer needed. this means we will stop growing our holdings of government of canada bonds. it is important, however, to remind canadians that the significant stimulus we have injected through qe remains in place. we just won ’ t be adding to it. we call this the reinvestment phase. in this phase, we will purchase bonds only to replace those that are maturing so that our overall holdings of government of canada bonds remain roughly stable over time. the end of qe comes as increasing vaccination rates are enabling continued progress in the economic recovery in canada and around the world. while new complications of reopening continue to crop up and that is boosting the prices of many globally traded goods, i ’ m struck by how much progress our economy has made since the start of the crisis. we ’ ve come a long way. and our forecast is for an increasingly healthy economy, even if these complications are going to be with us for a while longer. we are forecasting annual growth in economic activity will be around 5 percent this year, and about 4¼ percent in 2022 and 3¾ percent in 2023. global supply chain disruptions and shipping bottlenecks are expected to restrain growth and boost prices into next year. so relative to our forecast in july, growth in canada is a little lower and inflation takes longer to come back down. the main forces pushing up prices — higher energy prices and supply bottlenecks — now appear stronger and more persistent than we

union. for a single currency area to work effectively, citizens should have faith in money in all its forms, not only in cash but also in bank deposits held across the whole region. we also need a prudential approach that ensures both a level playing field and that no exemptions from the rules are granted to protect zombie banks. which leads me to my second remark. in times of low profitability and increased competition, be it from other banks or from newer start - ups, keeping your customers happy is key to keeping them as your customers. therefore, it is important to ensure that customers ’ interactions with banks can be carried out in the manner that most satisfies the customers. as an example, let me 3 / 5 bis central bankers'speeches discuss briefly the use of cash and the growing shift to newer payment systems. there is now a large range of non - cash payment options available, such as credit cards, electronic payments, portable wallets and mobile phone payments to name but a few. as more people adapt to new payment options, there is a risk of disrupting banks ’ business models. this makes it important for banks to remain agile in the face of these changes and to endeavour to meet their customers ’ wishes. we currently witness frequent lobbying, overt and covert, to abolish cash. i won ’ t dwell today on the plausibility of the justifications proposed, except to note that such lobbying fails to respect the will of the general population : cash remains popular. recent research for the ecb finds that 80 % of transactions at point of sale are in cash. even adjusting for the value of transactions, cash still accounts for the majority. indeed, the demand for cash currently outstrips the growth in nominal gdp. there are valid privacy reasons for maintaining cash, and it provides the general public with direct access to central bank money. for an independent institution like the ecb, maintaining that link is important, which is why we place great emphasis on ensuring people ’ s continued trust in cash. for this purpose, we have overhauled the security features in the euro ’ s new europa series. to date we have released new versions of the lower denominations – up to and including the 50 euro note. next year we will introduce stronger and more secure versions of the higher denomination banknotes. given this widespread desire to use cash, banks should facilitate rather than obstruct customers in using their preferred method of payment. time will tell how the use of cash