david longworth : promoting stability, confidence and well - being remarks by mr david longworth, deputy governor of the bank of canada, to the greater kitchener waterloo chamber of commerce, waterloo, ontario, 6 february 2007. * * * good afternoon. it's good to be in kitchener - waterloo, an urban region well known for its dynamism. gdp growth here is among the fastest of all regions in the province. the strengths of the twin cities – in research, advanced manufacturing, and information technology, among other sectors – are well known. less well known, perhaps, is the region's success in responding effectively to changes in the world economy. from the making of shoes and buttons to digital imaging and advanced communications, this ongoing success in dealing with change is a testament to your flexibility and entrepreneurial spirit. it may also reflect the emphasis this region has long placed on training and education. education acts as a kind of bedrock, a foundation that helps people deal with change and face the future with confidence. change is often difficult. as you know, this region has had to cope with a good deal of difficult economic adjustment. what can make change easier to deal with is a backdrop of stability in underlying policy fundamentals. that is what the bank of canada can help to provide. as the nation's central bank, the bank of canada has a mandate to promote economic and financial stability and well - being. to fulfill this mandate, we work in three main areas : conducting monetary policy, promoting a safe, sound, and efficient financial system, and designing and issuing secure bank notes. in my remarks today, i'd like to explain this work. a useful way to do this is to outline, for each area of responsibility, the goal, and the means by which we try to achieve that goal, and then provide an assessment of how we've been doing, as well as our plans for improvement. let me start by describing our work in monetary policy. monetary policy the ultimate aim of canadian monetary policy is to help our economy achieve its maximum sustainable growth, and thus contribute to rising living standards for canadians. the best way to achieve this objective, we've learned from experience, is by working towards a specific, concrete goal – that of keeping inflation low, stable, and predictable. inflation control contributes to better economic performance in many ways. let me highlight two of them. first, low and stable inflation allows us to read price signals clearly, which in turn helps both

do to raise canada's productivity and make our economy more resilient. ingredients of productivity, and canada's record economists will tell you that three factors determine how productive an economy's workforce is : capital intensity, labour composition and multifactor productivity. these are the types of words that often lead non - economists to tune out. but they're important, and once you get past the jargon, they're not that complicated. so, let's look at each one. capital intensity is about equipping workers with better tools. if you run a snow - clearing business, your workers will be able to clear more driveways if they have solid shovels that don't break easily. of course, give them a snow blower and they'll be able to clear many more driveways than with just shovels. invest in pickup trucks with plows, and they can do even more. the most natural way to think about capital intensity is in physical terms like machinery, but of course some of the biggest advances in productivity have come through improvements in computing power and the ability to use and move information. the smartphone in your pocket has way more computing power than the spaceship that first 2 / 6 bis - central bankers'speeches took humans to the moon. these advances continue to put more capability in the hands of employees, giving them the ability to be more productive across a wide range of industries, whether goods or services. labour composition in an economy measures the skill level of people in the labour force and how much training they receive. the more skills people have and the more training they receive, the more value they can generate on the job. finally, there's multifactor productivity, which measures how efficiently capital and labour are being used. this can refer to intangibles such as how much competition a company faces, economies of scale, management practices and many others. it can also refer to how well companies are taking advantage of technologies such as machine learning and generative artificial intelligence. those are the ingredients of productivity. now, when people measure productivity in an economy, they are looking either at its level - how much value an economy is producing for every hour worked - or at the growth rate of that productivity. canada has been struggling on both measures for a while. back in 1984, the canadian economy was producing 88 % of the value generated by the us economy per hour. that's not great. but by 2022, canadian productivity had