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In a speech to members of the Financial Markets Association of Canada and Women in Capital Markets, Deputy Governor Agathe Côté discusses risks to the Canadian financial system and reform of the global system.

Cyclical and structural factors have led to a low-interest-rate environment, Bank of Canada Governor Mark Carney said today in a speech that reviewed the implications of such an environment for financial stability and economic growth in Canada and globally.

Current turbulence in Europe is a reminder that the crisis is not over, but has merely entered a new phase. In a world awash with debt, repairing the balance sheets of banks, households and countries will take years.

John Maynard Keynes said the objective of "analysis is … to provide ourselves with an organized and orderly method of thinking out particular problems .… This is the nature of economic thinking."

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.

While the Canadian economy will likely grow faster than the economies of the other G-7 countries next year, the Bank of Canada expects our recovery to be more protracted than usual – and more reliant on domestic demand, Bank of Canada Governor Mark Carney said today.

With your professional interests in foreign exchange, money markets, capital markets, and derivatives, I'm sure the past year and a half has been exciting and interesting – if those are the right words. We've been living through a period of astonishing financial turbulence, historic marketplace losses, and serious threats to financial stability.

The extraordinary turmoil of 2007 and 2008 has brought to the fore many issues and challenges, most of which will be with us for some time as we deal with what has become the deepest financial crisis since the 1930s. Policy-makers around the world have taken bold and timely steps to deal with the financial instability and economic crisis, but it will take time for confidence to be restored and for markets to become fully functional again.

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.

While measures taken to address the global financial crisis will be successful, policy-makers need to improve their ability to detect the next crisis before it occurs, Bank of Canada Governor Mark Carney said today.