reduced budget deficits and debts, and business restructuring – have provided a sound base for the canadian economy during this turbulent time. they have also helped smooth the process of exchange rate and economic adjustment that i have been describing. because of our good inflation record in recent years, achieved through the bank ’ s commitment to inflation targets, inflation remained subdued, even as our currency was falling and causing prices of imported goods to rise. low inflation and a much improved fiscal position have helped to keep interest rates down. at the same time, because of restructuring, many more canadian firms have been in a strong position to take advantage of the low canadian dollar and increase their sales abroad. low interest rates have also made it easier for businesses to finance investments so that they can expand production capacity and increase their foreign sales. the outlook for the canadian economy the fundamental improvements in our economic foundation and the way that canada has coped with these recent external financial difficulties give us good reason to be optimistic about the future. the export sector has been an important source of strength for the canadian economy for some time now. recently, the stimulus from spending by canadian households and businesses has also been growing. indeed, with the waning of last autumn ’ s global strains, consumers have regained the confidence to go out and buy a new car, a house, or furnishings. and businesses have revived their plans for investment in machinery and equipment ( including continued buoyant spending on computer upgrades, partly related to year 2000 readiness ). with improved confidence, relatively low interest rates, and gains in employment, these trends should continue. clearly, conditions outside canada remain crucial to our economic outlook. in europe, prospects for stronger growth now look better than they did a few months back. even for the troubled japanese economy, next year should be brighter. forecasts for a number of emerging - market economies, particularly in asia, have also been revised up. and with these improved global prospects, the prices of a number of our key commodities – especially energy, base metals, and minerals – have risen. of course, for canada the external influence that matters the most is the us economy. that economy has turned in an amazing performance in the past seven years – robust output growth, low unemployment, and low inflation. but with us consumers and businesses continuing to spend strongly, and labour markets tightening further, some signs of cost pressures have emerged recently. this has rekindled concerns about a pickup of inflation down the road. and it has prompted the us federal reserve

national bank for doing exactly that in the bad times of 2013. they then happily add that greece would have benefited from having its own currency and that germany is profiting from the euro being weaker than the deutschmark would have been. the same, however, doesn ’ t go for the czech republic after 2013. these endearing 2 / 3 bis central bankers'speeches inconsistencies are present throughout the population. here again, however, the eurozone and its satellites offer parallels. you in copenhagen have a fixed exchange rate against the euro ( and previously had a fixed rate against the mark ) and thus in effect “ buy in ” monetary policy from frankfurt. you have your own notes and coins but not your own monetary policy. note this fine “ scandinavian paradox ” : you have an opt - out from the euro following the 2000 referendum, yet you do not make your own monetary policy, nor did you before the euro was created, whereas the swedes do not have an opt - out ( although they have been trying not to fulfil the criteria and not to join ever since rejecting the euro in their 2003 referendum ), yet they pursue autonomous monetary policy. i sometimes wonder whether the czech sitting - on - the - fence approach is heading towards the danish model. it wouldn ’ t be my choice, but it ’ s good to be prepared. the price of entering goes up, or the bulgarian thorny road to the euro yes, some new eu members are still keen to join the eurozone. especially in bulgaria, the desire is understandable : the country has held a fixed exchange rate visa - a - vis the euro since the common currency ’ s inception. just like denmark, bulgaria has outsourced its monetary policy to frankfurt, but unlike denmark, it would also like to become an official member of the club to enjoy all the benefits of using one of the most prestigious world currencies. on paper, at least, bulgaria appears to be an ideal candidate : unlike many of the current members of the eurozone, it actually fulfils the key maastricht criteria. but the idea of bulgarian membership is not an appetizing one to many technocrats at the ecb and to the representatives of some eurozone member states. so, for many years, bulgarians have been tacitly discouraged from applying to erm ii, the antechamber of the euro. this year, however, they tried their luck : perhaps they felt that the