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As the size and complexity of the foreign exchange reserves have grown over the years, enhancements to the management framework needed to keep pace. This is a common theme for most reserve managers around the world. In Canada, the enhancements focused on governance, portfolio management, risk measurement and risk management. This article briefly describes these enhancements, why they were implemented and some of the lessons learned along the way.

During this time of heightened public health measures intended to limit the transmission of COVID-19, some consumers and businesses are choosing not to use cash to limit potential exposure.

With the cessation of Canadian Dollar Offer Rate’s (CDOR) publication in June 2024, it is expected that Bankers’ Acceptance (BA) will cease to exist as a money market instrument.

Governor Mark Carney announces the launch of the new $100 bank note.

While the CPI is the most commonly used measure to track inflation, it is not fully consistent with a true cost-of-living index (COLI). Although the official treatment of durable goods and housing in the CPI represents an acceptable compromise in the current environment of low and stable inflation, Sabourin and Duguay suggest that it would be worthwhile to consider treating housing and durables in the same way and bringing the actual CPI closer to a COLI. This could be accomplished by employing an enhanced user-cost approach to calculate the imputed cost of the services provided by the use of durable goods or housing.

The global economy has shown greater strength than was anticipated at the time of the November Report.

This article summarizes the proceedings of a conference hosted by the Bank of Canada in May 1997. The first conference held by the Bank on this subject was in 1993, two years after the introduction of inflation targeting in Canada. The 1997 conference revisited many of the analytic issues related to price stability that had been examined at the first conference, while also considering several additional questions. This time, with the extension of inflation-control targets beyond 1998 under consideration, particular emphasis was placed on the role and design of those targets. The conference also featured a round-table discussion among practitioners of monetary policy in three inflation-targeting countries—New Zealand, Sweden, and the United Kingdom. Their remarks, which focussed on the experience with inflation targets, bring out very clearly the common challenges facing monetary policymakers in open economies.

Inflation expectations for one to two years ahead have come down again but remain well above their levels from before the COVID-19 pandemic. The higher cost of living is the most pressing concern for consumers, and along with elevated interest rates, continues to constrain most households’ spending. Homeowners who are planning to renew their mortgage over the next two years and who expect significantly higher payments are likely to plan spending cuts. Some households though are starting to think the worst is behind them. Consumer confidence about the future of the economy has improved alongside their lower inflation expectations. Expected lower interest rates and strong immigration, which boosts housing demand, are behind consumers’ view that housing market will increase over the next year. Workers remain confident about jobs.

This discussion paper is the third in the Financial Markets Department’s series on the structure of Canadian financial markets. These papers are called “ecologies” because they study the interactions among market participants, infrastructures, regulations and the terms of the traded contract itself.