TORONTO, Jan. 25, 2012 /CNW/ - Canada should improve its oversight of
financial stability in the economy with a watchdog committee co-chaired
by the Bank of Canada and Finance Canada, according to a report
released today by the C.D. Howe Institute. In Financial Stability: The Next Frontier for Canadian Monetary Policy, McGill economist Christopher Ragan says the next goal of monetary
policy, in Canada as elsewhere, is to achieve and maintain financial
stability in the economy.
"While the Bank of Canada's monetary policy has traditionally, and very
successfully, focused on maintaining low inflation, playing a leading
role in this committee would allow it to participate in mitigating
financial excesses while enhancing the capacity of the financial system
to absorb shocks," says Ragan. "Canada weathered the recent financial
crisis well, but a better system could improve the odds of forestalling
the next one."
The maintenance of financial stability in Canada should be added to the
mandate of all members of the existing informal Senior Advisory
Committee (SAC), which brings together various departments and
The new committee should be underpinned by legislation, and its formal
minutes should be sent to the minister of finance. Its membership
should be expanded to include the CMHC (or its financial arm) and, if
one is eventually created, a national securities regulator.
The federal government should ensure that all SAC members have the
appropriate resources to understand more fully those aspects of the
financial system that are beyond their direct concern.
The Bank of Canada should take a clear leadership role within SAC, and
the governor of the Bank and the deputy minister of finance should
co-chair the committee.
The co-chairs should make clear policy recommendations directly to the
minister of finance, who would be ultimately responsible for all policy
For the report go to: http://www.cdhowe.org/pdf/Commentary_338.pdf
SOURCE C.D. Howe Institute
For further information:
Christopher Ragan, Associate Professor of Economics, McGill University and David Dodge Chair in Monetary Policy, C.D. Howe Institute; or Philippe Bergevin, Senior Policy Analyst, C.D. Howe Institute, 416-865-1904; email: firstname.lastname@example.org.