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The global economic outlook has been clouded by a high degree of uncertainty, accentuated most recently by the war in Iraq.

The technology behind blockchain has attracted a lot of attention. However, this technology is for the most part not well understood. There is no consensus on what benefits it may bring or on how it may fail.

Thank you for inviting me here today. It is a pleasure to be with you. This afternoon, I would like to talk about liquidity and the role of the Bank of Canada.

There have been a number of significant economic and financial developments since the time of the July Monetary Policy Report Update.

Results from the Business Outlook Survey and the Business Leaders’ Pulse reveal that firms’ outlooks and intentions remain subdued despite a gradual improvement in sentiment. Expectations for growth in domestic and export sales are still soft. Most firms do not plan to increase staffing, and investment intentions are restrained. While businesses continue to expect cost increases from tariffs and trade uncertainty, weak demand limits their ability to pass these costs through to prices. One-year-ahead inflation expectations remain below the peak reached earlier in the trade conflict.

The global economic recovery is under way, supported by continued improvements in fi nancial conditions and stronger domestic demand growth in many emerging-market economies.

From the end of 2008 to the middle of last year, Canada experienced a short, sharp recession. With the exception of government spending, all major components of aggregate demand declined, and industrial production dropped 15 per cent. Canadian exporters suffered particularly, owing to the sharp fall in the components of U.S. economic activity that matter most for Canada.

As the ultimate provider of Canadian-dollar liquidity to the financial system, the Bank of Canada has the unique capacity to create Canadian-dollar claims on the central bank and the power to make secured loans or advances to chartered banks and other members of the Canadian Payments Association. The Bank supplies overnight credit on a routine basis through the Standing Liquidity Facility (SLF) to direct participants in the Large Value Transfer System, and Emergency Lending Assistance (ELA) to solvent deposit-taking institutions that require more substantial and prolonged credit. The authors review the policy framework that guides the Bank's lender-of-last-resort function, including the key issues, terms and conditions, and eligibility criteria associated with its SLF and ELA activities. Also discussed are foreign currency ELA, the relationship between SLF and ELA, systemic risk and Bank of Canada intervention, and the potential provision of liquidity to major clearing and settlement systems.

The Bank’s internal credit risk assessment abilities are regularly enhanced. In this note, we present a recent innovation that extends the set of market-based indicators used in the credit risk assessment of financial counterparties.