Search

It has been a difficult year for capital markets professionals. The turmoil has deteriorated into a full-blown financial crisis. Most financial markets have experienced historic falls in prices, and some are strained to the point of closing.

The Canadian financial system has fared relatively well through this crisis, thanks to effective regulation and prudent practices that have worked like sandbags to protect our financial system from the storms in today's global economy.

Throughout the years, Canada has been a major beneficiary of London's innovation. Companies of adventurers, conceived and funded in London, opened up large swathes of Canada to international trade.

As we celebrate the 400th anniversary of the founding of Quebec, I thought it would be fitting for me, as a central banker, to take a look at how money has evolved over part of the past four centuries.

In Canada, our financial system is sound, and our financial institutions are already well capitalized. We are nonetheless affected by global developments. That is why the Bank of Canada has taken extraordinary measures to provide liquidity.

The events of the past few weeks in global financial markets have been dramatic. Money and credit markets seized up. There was a massive flight to the safety of the highest quality of government debt.

These past few months have been busy for central bankers, to say the least, and the past few days are certainly no exception. While developments on Wall Street have garnered much attention, the cost of living has also been an issue for us all, whether we're buying gas at the pumps, booking an airline ticket, or just picking up a loaf of bread at the grocery store.

The financial turbulence over the past year has been costly and difficult for many individuals and financial institutions; it's been challenging for policy-makers; and it's had implications for the overall economy.

In the Update, the Bank described three major developments affecting the Canadian economy: protracted weakness in the U.S. economy, ongoing turbulence in global financial markets, and sharp increases in certain commodity prices, particularly energy.