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The theme of this conference – "Adapting to a New World Order" – suggests that it is clear how global commerce and finance will be reorganized in the wake of the current crisis. However, the outcome is far from preordained. How we manage the rebalancing of the global economy could profoundly influence how open, equitable, and prosperous the New World Order will be.

This paper surveys and summarizes the literature on how fiscal policy and monetary policy can complement each other in stabilizing economic activity.

The Financial System Review concludes that the overall level of risk to Canada’s financial system is largely unchanged from six months ago. While household vulnerabilities have moved higher, the ongoing economic recovery in Canada means that the overall risk remains the same. The Bank highlights three vulnerabilities in the financial system: the elevated level of household indebtedness, imbalances in some regional housing markets and the fragility of liquidity in fixed-income markets.

2011 was a challenging year for the global economy. Amid global turbulence, Canada’s macroeconomic policy framework has stood us well. The 2011 Annual Report provides a Message from the Governor, highlights key achievements over the year, describes the Bank’s corporate governance, and presents financial statements in conjunction with Management’s Discussion and Analysis.

Examining the incentives for banks to hold various assets on their balance sheets for use as collateral when the opportunity cost of doing so can be high; an outline of the complexity inherent in any modern risk-management system and review of possible strategies to improve the performance of risk management; causes and consequences of the changing pace of labour reallocation in Canada; description of the structure and functioning of BoC-GEM— an adaptation of the Global Economy Model— with examples of its recent application.

This paper provides an overview of digitalization and its economic implications. We assess the scope of digitalization in Canada as well as the challenges related to its measurement.

Over the last 30 years, the business mix of banks in Canada has changed significantly. Progress in information-processing technology, legislative changes, and market forces have combined to blur the traditional distinctions between banks and other financial institutions and have allowed banks to offer a much wider range of products and services. In this article, the author reviews the expansion of bank lending to households over this period and their recent movement into personal wealth management. While these trends were facilitated by revisions to legislation, they also reflected the changing needs of the "baby boom" generation, first as home-buyers and, more recently, as middle-aged investors. On the commercial and corporate side, banks reacted to the rapid expansion of securities markets (and to the reduced demand for intermediation by both lenders/depositors and borrowers) by moving into investment banking, after legislative changes opened this business to them in the late 1980s. They also used their expertise in credit assessment and risk management to provide credit guarantees and to act as counterparties and intermediaries in derivatives markets. Notable in this broadening of bank activities has been their more recent entry into the trust, mutual fund, and retail brokerage business. The banks have also made preliminary forays into insurance. The expansion of off-balance-sheet activities has made fee income an increasingly important part of bank earnings. The article also looks at the emerging tools and techniques that will most likely transform the structure of banking in the future.

This paper looks at the implications for monetary policy of the widespread adoption of artificial intelligence and machine learning, which is sometimes called the “fourth industrial revolution.”

At the Bank of Canada, we have worked hard over the past several years to define our goals and our methods for achieving them. We have continued to strengthen our monetary policy framework, and we have established priorities in all areas of our operations to help us meet our strategic objectives. In 2002, the Bank set out a medium-term plan for the period 2003–05. The plan’s clearly defined policy frameworks and priorities were critical in guiding our analysis and our decisions in 2003, a year in which Canadians across the country were affected by a number of severe and unanticipated events.

Should monetary policy lean against housing market booms? We approach this question using a small-scale, regime-switching New Keynesian model, where housing market crashes arrive with a logit probability that depends on the level of household debt.