Publications

• October 22, 2003

  Monetary Policy Report – October 2003

  

  In the April Monetary Policy Report, the Bank noted that inflation was well above its 2 per cent target and that short-term inflation expectations had edged up.

  Content Type(s): Publications, Monetary Policy Report
• August 23, 2003

  Financial Developments in Canada: Past Trends and Future Challenges

  Bank of Canada Review - Summer 2003 Charles Freedman, Walter Engert

  Freedman and Engert focus on the changing pattern of lending and borrowing in Canada in the past thirty to forty years, including the types of financial instruments used and the relative roles of financial institutions and financial markets. They examine how borrowing mechanisms have changed over time and consider the challenges facing the Canadian financial sector, including whether our financial markets are in danger of disappearing because of the size and pre-eminence of U.S. financial markets. Some of the trends examined here include syndicated lending, securitization, and credit derivatives, a form of financial engineering that has become increasingly important in the last few years. They also study bond and equity markets to determine whether Canadian capital markets have been hollowed out or abandoned by Canadian firms and conclude that the data do not provide much support for that view.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial institutions, Financial markets, Financial services, Recent economic and financial developments
• August 23, 2003

  Bank of Canada Review - Summer 2003

  

  Cover page

  Canadian World War I War Bond

  The $100 10-year bond of the FirstWar Loan is slightly larger than a sheet of legal-sized paper. It forms part of the National Currency Collection, Bank of Canada.

  Photographed by Gord Carter, Ottawa.

  Content Type(s): Publications, Bank of Canada Review
• August 22, 2003

  Measuring Interest Rate Expectations in Canada

  Bank of Canada Review - Summer 2003 Grahame Johnson

  Financial market expectations regarding future changes in the target for the overnight rate of interest are an important source of information for the Bank of Canada. Financial markets are the mechanism through which the policy rate affects other financial variables, such as longer-term interest rates, the exchange rate, and other asset prices. An accurate measure of their expectations can therefore help policy-makers assess the potential impact of contemplated changes. Johnson focuses on the expectations hypothesis, which measures expectations of future levels of the target overnight rate as implied by current money market yields. Although expectations can be derived from the current yield on any short-term fixed-income asset, some assets have proven to be more accurate predictors than others. The implementation of a policy of fixed-announcements dates has coincided with the increased predictive power of these short-term assets. As a result of this improvement, a relatively simple model of the yield curve can now provide an accurate measure of financial market expectations.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rates, Financial markets, Interest rates
• August 21, 2003

  Dollarization in Canada: An Update

  Bank of Canada Review - Summer 2003 John Murray, James Powell, Louis-Robert Lafleur

  The authors describe a special survey of the payment and financial-reporting practices of Canadian firms conducted by the Bank of Canada's regional offices to determine if the U.S. dollar has started to displace the Canadian dollar as a preferred unit of account. A cross-section of firms was asked what currency (or currencies) they used: (i) for quoting sales to Canadian customers, (ii) for quoting prices to foreigners, (iii) for reporting their financial results, and (iv) for quoting salaries and wages. The survey results reported here extend some earlier results reported in a previous Review article by Murray and Powell. The data indicate that, despite the dominance of the U.S. dollar in world trade and as an international standard of value, use of the U.S. dollar in Canada is very limited. The vast majority of Canadian firms price their products and keep their financial statements in Canadian dollars, and very few workers in Canada have their salaries paid in a foreign currency. The Canadian dollar is still strongly preferred for most pricing and financial-reporting activities in Canada, and there is very little evidence of "dollarization."

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rate regimes
• July 17, 2003

  Monetary Policy Report Update – July 2003

  Since the April Monetary Policy Report, there have been a number of unanticipated developments that have changed the outlook for inflation and economic activity in Canada.

  Content Type(s): Publications, Monetary Policy Report
• June 23, 2003

  Financial System Review - June 2003

  

  This section of the Financial System Review examines the recent performance of the Canadian financial system and the factors, both domestic and international, that are influencing it.

  Content Type(s): Publications, Financial Stability Report
• June 23, 2003

  Business-Continuity Planning in Clearing and Settlement Systems: A Systemwide Approach

  Financial System Review - June 2003 Ron Allenby

  Content Type(s): Publications, Financial System Review articles
• June 23, 2003

  CDSX: Canada’s New Clearing and Settlement System for Securities

  Financial System Review - June 2003 Darcey McVanel

  Content Type(s): Publications, Financial System Review articles
• May 23, 2003

  The Bank of Canada: Moving Towards Transparency

  Bank of Canada Review - Spring 2003 John Chant

  During the 1990s the Bank of Canada made several changes that transformed its conduct of monetary policy. In the 1960s and 1970s, policy decisions were made in an environment characterized by instrument opaqueness and goal opaqueness, which tended to shield the Bank's operations from scrutiny and accountability. Since the 1970s the Bank has moved towards transparency and openness by rejecting multiple policy instruments and adopting a single, well-defined goal of inflation control. A recent survey has shown that the Bank of Canada is in the middle range of central banks with regard to its transparency and has lost points for not publishing the forecasts that shape its policy or the minutes and voting records of its governing body. Chant suggests that the public has benefited significantly from the changes the Bank has made, but that it should continue to support research on the benefits of low and stable inflation and continually inform other policy-makers and the public of the results.

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