Publications

• May 19, 1999

  Monetary Policy Report – May 1999

  Six months ago, at the time of the last Monetary Policy Report, the global economic and financial environment was volatile and highly uncertain because of the adverse situation in Asia and the fallout from the Russian debt moratorium.

  Content Type(s): Publications, Monetary Policy Report
• May 15, 1999

  Recent developments in the monetary aggregates and their implications

  Bank of Canada Review - Spring 1999 Joseph Atta-Mensah, Loretta Nott

  In its conduct of monetary policy, the Bank of Canada carefully monitors the pace of monetary expansion for indications about the outlook for inflation and economic activity. In recent years, a number of factors have distorted the growth of the traditional broad and narrow aggregates. In this article, the authors discuss the uncertainty surrounding the classification of deposit instruments that has resulted from the elimination of reserve requirements and from other financial innovations. They introduce two new measures of transactions balances, M1+ and M1++ (described more fully in a technical note in this issue of the Review), that internalize some of the substitutions that have occurred. They attribute the deceleration in M1 growth in 1998 partly to the declining influence of special factors, partly to a lagged response to interest rate increases in 1997 and early 1998, and partly to some temporary tightening in credit conditions in the autumn of 1998. The broad monetary aggregate M2++, which includes all personal savings deposits, life insurance annuities, and mutual funds, grew at a steady pace in 1998, presaging growth of about 4 to 5 per cent in total dollar spending and inflation inside the target range.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary aggregates
• May 15, 1999

  Bank of Canada Review - Spring 1999

  

  Cover page

  Merchant’s note, 1837

  Approximately four by three inches in size, this bon is part of the National Currency Collection, Bank of Canada.

  Photography by James Zagon.

  Content Type(s): Publications, Bank of Canada Review
• May 14, 1999

  Open outcry and electronic trading in futures exchanges

  Bank of Canada Review - Spring 1999 Raymond Tsang

  Despite the efficiency gains that accompany automation, most large futures exchanges have been reluctant to move away from the traditional trading floor, citing early evidence that open outcry exchanges were more liquid than electronic exchanges. More recent studies, however, suggest that electronic trading is superior to open outcry in many respects, including liquidity. In this article, the author compares the two trading systems. Although many exchanges are shifting towards electronic trading, there are still several obstacles to this transition. But as technology rapidly reduces the cost of automation and increases the demand for global 24-hour trading, a worldwide transition to electronic order-matching will likely be the next important milestone for futures exchanges. Less-automated exchanges (including the Canadian futures exchanges) will undoubtedly continue to study and promote automation in order to keep pace with technological innovations.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets