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The same is true of the Canadian economy, which must always adjust to changing domestic and world circumstances. During 2003 and so far this year, some of those adjustments may have felt more like overhauls, particularly for some manufacturing firms here in Ontario.

As you know, many institutions, both governmental and private, are currently concerned about governance structures, accountability and rules of behaviour.

For five years, the research program here at Schulich has helped to support and nurture a Canadian academic community focused on financial services. In doing so, the program has encouraged researchers to fill the gaps in our knowledge and help policy-makers and regulators to do a better job. After five years, it's useful to think back and recall the motivations for establishing this program in the first place.

The giant emerging-market economies of China and India are truly changing the economic balance across the Pacific in a way that none of us can afford to ignore. The sheer size of these two economies is very impressive in itself: together, they account for close to 40 per cent of the world's population.

To state the obvious, Canada is a very open economy, heavily dependent on foreign trade. What goes on in the rest of the world can have a substantial impact on our domestic economy.

There is a great physical distance between our two countries - in terms of latitude, there are about 80 degrees of separation between Buenos Aires and Ottawa. But despite that distance, Canada and Argentina are closer, and have more in common, than you might think. We are both federations, with a certain natural tension between the national government and relatively powerful provinces.

Today, I want to focus my remarks on Canada's adjustment to changes in the global economy. I will talk about our efforts to adjust to longer-term economic forces and about the challenges that these forces present. Some of our experiences may be relevant to other economies that are making similar adjustments in the face of similar economic circumstances.

We both share borders with the United States, the most important export market for each of us. Both Canada and Mexico have recently faced setbacks in cross-border trade with the United States. These stem not only from weaker U.S. domestic demand, but also from specific trade problems and from border-crossing delays associated with tighter security.

These are turbulent times, not just for business people, but for all Canadians. We have come through a very difficult year, a year filled with surprises that have challenged us all. At times like these, it is easy to focus on the near-term issues and problems.

When giving a speech near the end of a year, it is common practice to look back over the past 12 months, consider what we have learned from the events and experiences of the year, and think a bit about what might lie ahead. I became Governor of the Bank of Canada in 2001 and, since that time, I have found myself saying at the end of each year, "Well, we won't see another year like that again."