Large and persistent current account imbalances are a global problem and all countries must adopt policies that will allow market forces to resolve them, Bank of Canada Governor David Dodge said today.

In a speech to the New York Association for Business Economics, Mr. Dodge discussed how policy-makers can develop an international monetary system that supports market-based solutions to global imbalances. Such a system would mitigate the risk that the imbalances will be resolved in a disorderly way that could plunge the world economy into a period of very slow growth or outright recession.

"Policy-makers around the world have a responsibility to facilitate adjustments in a way that keeps the global economy growing at potential and mitigates the impact of these risks. Our job is to provide a framework that helps market forces promote an orderly adjustment," the Governor said.

That framework should include better-functioning financial markets, more flexible currency regimes, more open international trade, and better domestic fiscal and structural policies. "Each country and each region has its work to do," Mr. Dodge said.