Scott Hendry
Senior Special Director
- Ph.D., University of Western Ontario (1993)
- M.A., University of Western Ontario (1988)
- B.A. (Honours), Wilfrid Laurier University (1987)
Bio
Scott Hendry was appointed Senior Special Director, Financial Technology (FinTech) in the Banking and Payments Department (BAP) in June 2016. In this role, he oversees the Bank’s efforts to monitor and research developments and implications of new technologies affecting the financial sector. He previously held the role of Director of Research for the Funds Management and Banking Department (FBD) and, before that, for the Financial Markets Department (FMD). His personal research has focused on electronic money, price discovery in the Canadian government bond market, and central bank communication. He has a PhD in Economics from the University of Western Ontario.
Staff discussion papers
The Positive Case for a CBDC
We discuss the competition and innovation arguments for issuing a central bank digital currency (CBDC). A CBDC could be an effective competition policy tool for payments. A CBDC could also support the vibrancy of the digital economy. It could help solve market failures and foster competition and innovation in new digital payments markets.Is Central Bank Currency Fundamental to the Monetary System?
In this paper, we discuss whether the ability of individuals to convert commercial bank money (i.e., bank deposits) into central bank money is fundamentally important for the monetary system.Is a Cashless Society Problematic?
The use of bank notes in Canada for payments has declined consistently for some time, and similar trends are evident in other countries. This has led some observers to predict a cashless society in the future.Staff working papers
A Framework for Analyzing Monetary Policy in an Economy with E-money
This paper considers an economy where central-bank-issued fiat money competes with privately issued e-money. We study a policy-setting game between the central bank and the e-money issuer and find (1) the optimal monetary policy of the central bank depends on the policy of the private issuer and may deviate from the Friedman rule; (2) multiple equilibria may exist; (3) when the economy approaches a cashless state, the central bank’s optimal policy improves the market power of the e-money issuer and can lead to a discrete decrease in welfare and a discrete increase in inflation; and (4) first best cannot be achieved.Swedish Riksbank Notes and Enskilda Bank Notes: Lessons for Digital Currencies
This paper examines the experience of Sweden with government notes and private bank notes to determine how well the Swedish experience corresponds to that of Canada and the United States. Sweden is important to study because it has had government notes in circulation for more than 350 years, and it had government notes before private bank notes.Canadian Bank Notes and Dominion Notes: Lessons for Digital Currencies
This paper studies the period in Canada when both private bank notes and government-issued notes (Dominion notes) were simultaneously in circulation. Because both of these notes shared many of the characteristics of today's digital currencies, the experience with these notes can be used to draw lessons about how digital currencies might perform.Central Bank Communication or the Media’s Interpretation: What Moves Markets?
The goal of this paper is to investigate what type of information from Bank of Canada communication statements or the market commentary based on these statements has a significant effect on the volatility or level of returns in a short-term interest rate market.Text Mining and the Information Content of Bank of Canada Communications
This paper uses Latent Semantic Analysis to extract information from Bank of Canada communication statements and investigates what type of information affects returns and volatility in short-term as well as long-term interest rate markets over the 2002-2008 period.Price Discovery in Canadian and U.S. 10-Year Government Bond Markets
This paper presents some new results on the price discovery process in both the Canadian and U.S. 10-year Government bond markets using high-frequency data not previously analyzed. Using techniques introduced by Hasbrouck (1995) and Gonzalo-Granger (1995), we look at the relative information content of cash and futures prices in the market for Canadian Government bonds using futures market data from the Montreal Exchange and OTC cash market data reflecting the inter-dealer market covered by CanPx.Uncollateralized Overnight Loans Settled in LVTS
Loan-level data on the uncollateralized overnight loan market is generated using payment data from Canada's Large Value Transfer System (LVTS) and a modified version of the methodology proposed in Furfine (1999). There were on average just under 100 loans extended in this market each day from March 2004 to March 2006 for a total daily value of about $5 billion.Price Discovery in Canadian Government Bond Futures and Spot Markets
In this paper we look at the relative information content of cash and futures prices for Canadian Government bonds. We follow the information-share approaches introduced by Hasbrouck (1995) and Harris et al (1995), applying the techniques in Gonzalo-Granger (1995), to evaluate the relative contributions of trading in the cash and futures markets to the price discovery process.Simple Monetary Policy Rules in an Open-Economy, Limited-Participation Model
The authors assess the stabilization properties of simple monetary policy rules within the context of a small open-economy model constructed around the limited-participation assumption and calibrated to salient features of the Canadian economy. By relying on limited participation as the main nominal friction that affects the artificial economy, the authors provide an important check of the robustness of the results obtained using alternative environments in the literature on monetary policy rules, most notably the now-standard "New Keynesian" paradigm that emphasizes rigidities in the price-setting mechanism.Labour Markets, Liquidity, and Monetary Policy Regimes
We develop an equilibrium model of the monetary policy transmission mechanism that highlights information frictions in the market for money and search frictions in the market for labour.Bank publications
Bank of Canada Review articles
February 17, 2011
Conference Summary: Financial Globalization and Financial Instability
The Bank of Canada’s annual conference, held in October 2010, brought together leading researchers from universities and central banks around the world.
December 18, 2006
A Summary of the Bank of Canada Conference on Fixed-Income Markets, 3–4 May 2006
The Bank of Canada's interest in fixed-income markets spans several of its functional areas of responsibility, including monetary policy, funds management, and financial system stability and efficiency. For that reason, the 2006 conference brought together top academics and central bankers from around the world to discuss leading-edge work in the field of fixed-income research. The papers and discussions cover such topics as the efficiency of fixed-income markets, price formation, the determinants of the yield curve, and volatility modelling. This article provides a short summary of each conference paper and the ensuing discussion.
August 24, 2004
The Efficiency of Canadian Capital Markets: Some Bank of Canada Research
Capital markets and their related financial instruments make an important contribution to the welfare of Canadians. The Bank of Canada is interested in the efficient functioning of capital markets through each of its responsibilities for monetary policy, the financial system, and funds management. Hendry and King highlight the key findings of Bank research published over the past year that addresses capital market efficiency and summarize lessons that have been learned. The research conducted thus far suggests that Canadian capital markets are efficient for a capital market of Canada's size but are less diverse than the U.S. capital markets, indicating that there is room for improvement in certain areas.Financial System Review articles
May 25, 2017
Project Jasper: Are Distributed Wholesale Payment Systems Feasible Yet?
This report describes a joint endeavour between public and private sectors to explore a wholesale payment system based on distributed ledger technology (DLT). They find that a stand-alone DLT system is unlikely to be as beneficial as a centralized payment system in terms of core operating costs; however, it could increase financial system efficiency as a result of integration with the broader financial market infrastructure.
Journal publications
Refereed journals
- "Labour Markets, Liquidity, and Monetary Policy Regimes,"
(with David Andolfatto, SFU, and Kevin Moran), Canadian Journal of Economics, Vol 37, p. 392-420, April 2004. - "Liquidity Effects and Market Frictions,"
(with Guang-Jia Zhang) Journal of Macroeconomics, Spring 2001, 23 (2): 153-176.
Other
Publications
- "Inflation Expectations and Learning about Monetary Policy,"
(with David Andolfatto, SFU, and Kevin Moran), DNB Staff Reports No. 121/2004. - "Inflation Persistence and Costly Market Share Adjustment: A Preliminary Analysis,"
(with Robert Amano), Monetary Policy in a Changing Environment, BIS Papers No. 19, p. 134-146. - "Liquidity Effects and Market Frictions,"
(with Guang-Jia Zhang), DNB Staff Reports No. 29/1998.