December 10, 1995 Developments in trusteed pension funds Bank of Canada Review - Winter 1995-1996 Jacobo De Leon Trusteed pension funds are one of the most important sources of retirement income for Canadians. They have also been one of the fastest-growing sectors of the Canadian financial market. Trusteed pension funds play an important role in capital markets, channelling billions of dollars of their members' contributions into investments in financial and real assets. This article presents an overview of the trusteed pension funds sector. It provides a context for this overview by briefly presenting other sources of retirement income in Canada. It then examines the sources of the sector's rapid growth, including regulatory developments that have affected it, namely the increase in allowable foreign content and the adoption of the prudent person rule. Finally, it looks at the evolution of the sector's asset mix and how the sector interacts with capital markets. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial institutions, Sectoral balance sheet
December 9, 1995 Survey of the Canadian foreign exchange and derivatives markets Bank of Canada Review - Winter 1995-1996 Martin Miville Since 1983, the Bank of Canada has conducted a triennial survey of foreign exchange market activity in Canada. The latest survey was done in April 1995 and covered activity in both the foreign exchange market and in the derivatives markets. The central banks of most other industrialized countries with active foreign exchange and derivatives markets also conducted similar surveys. This was the first time that markets for over-the-counter (OTC) derivatives were surveyed by central banks in a systematic and comprehensive fashion. The average daily turnover in the Canadian foreign exchange market, including foreign exchange derivatives, has continued to grow rapidly (by approximately 36 per cent to about U.S.$30 billion) since the last survey, although at a slower pace than during the 1980s. Foreign exchange and interest rate derivatives contracts dominate derivatives market activity, with equity and commodity derivatives activity being almost negligible in comparison. Through April 1995, daily turnover volume in Canadian foreign exchange and interest rate derivatives markets averaged about U.S.$19 billion and U.S.$15 billion, respectively, mostly in forward and swap transactions. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets
The Empirical Performance of Alternative Monetary and Liquidity Aggregates Staff Working Paper 1995-12 Joseph Atta-Mensah This paper examines the empirical performance of alternatives to the monetary aggregates currently published by the Bank of Canada. The results show that real M1 and real M1a perform about equally well in providing leading information about real output at short horizons. However, on theoretical grounds, M1a is a more attractive aggregate, since it excludes […] Content Type(s): Staff research, Staff working papers Topic(s): Monetary and financial indicators
November 20, 1995 Monetary Policy Report – November 1995 This is the second in a series of semi-annual reports designed to increase the transparency and understanding of Canadian monetary policy. Content Type(s): Publications, Monetary Policy Report
November 10, 1995 The Government of Canada bond market since 1980 Bank of Canada Review - Autumn 1995 Andrew Branion This article focusses on a key component of the federal government's debt-management program, Government of Canada marketable bonds. It first provides a broad overview of the characteristics of these bonds and then discusses the workings of the domestic market, from the formulation of a debt-management strategy to the primary issuance of the bonds, the delivery and payment process, and transactions in the secondary market. Recent developments that have enhanced the overall efficiency of the market are also examined. This article is part of a series that describes and analyses features of the Canadian financial sector. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets
November 10, 1995 Bank of Canada Review - Autumn 1995 Cover page Mauritius, 10 rupees, 1971 Slightly smaller than a Canadian silver dollar and struck in copper-nickel, the coin shown on the cover is part of of the National Currency Collection of the Bank of Canada. Photography by James Zagon. Content Type(s): Publications, Bank of Canada Review
November 9, 1995 The effect of foreign demand shocks on the Canadian economy: An analysis using QPM Bank of Canada Review - Autumn 1995 Benjamin Hunt Historically, rapid and unsustainable increases in the demand for goods and services originating within the economies of Canada's major trading partners have had a significant impact on the domestic economy. These episodes are typically characterized by increases in world commodity prices and by a tightening of monetary conditions abroad to contain inflationary pressures. In this article, the author uses the Bank's quarterly projection model (QPM) (described in the autumn 1994 issue of the Review) to trace the mechanisms that transmit these foreign developments throughout the Canadian economy. In addition, he outlines the response that is required from domestic monetary authorities to maintain a target rate of inflation. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Recent economic and financial developments
November 8, 1995 The role of monetary conditions and the monetary conditions index in the conduct of policy Bank of Canada Review - Autumn 1995 Charles Freedman In these excerpts from a presentation to a conference in Toronto, Deputy Governor Charles Freedman analyses the way in which the monetary conditions index (MCI) enters into the Bank's thinking and actions. He describes how the Bank works in the context of a forward-looking assessment of economic developments and inflationary pressures to decide upon a desired path for the MCI that will result in a rate of inflation, six to eight quarters ahead, that is within the Bank's target band. Mr. Freedman also uses specific examples to explain how various shocks to the economy can change the Bank's desired path for monetary conditions. He describes the role that tactical considerations relating to market circumstances play regarding the timing of Bank actions to bring monetary conditions onto the desired path and emphasizes the need to give precedence to steadying nervous markets. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary conditions index
Long-Run Demand for M1 Staff Working Paper 1995-11 Scott Hendry The goal of this paper is to investigate and estimate long-run relationships among M1, prices, output and interest rates, with a view to determining if there is a stable relationship that can be interpreted as long-run money demand. The paper uses a maximum-likelihood multiple-equation cointegration technique, developed by Johansen, to fit a system of equations […] Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Monetary aggregates
The Canadian Experience with Weighted Monetary Aggregates Staff Working Paper 1995-10 David Longworth, Joseph Atta-Mensah This paper compares the empirical performance of Canadian weighted monetary aggregates (in particular, Fisher ideal aggregates) with the current summation aggregates, for their information content and forecasting performance in terms of prices, real output and nominal spending for the period 1971Q1 to 1989Q3. The properties of money-demand equations for these aggregates, particularly their temporal stability, […] Content Type(s): Staff research, Staff working papers Topic(s): Monetary aggregates