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Powerful developments and trends in the global economy mean that Canadian businesses need to make adjustments, Bank of Canada Governor David Dodge said today.

Many analysts have examined the relationship between the financial system and economic development. They have uncovered some interesting facts regarding the characteristics of the financial system - characteristics that contribute to the best possible allocation of savings to productive investments, which are themselves engines of economic growth.

The constant economic change that we've been experiencing makes it critical for the central bank to stand on a firm foundation as it works to enhance the country's economic strength. The Bank of Canada's monetary policy framework is such a foundation.

Over the past year, I have spoken a number of times on the topic of efficiency, and why it is so important for Canadian policy-makers to keep in mind the goal of an efficient financial system. Today, I want to talk about Canada's system of pension plans and how they contribute to the efficiency of financial markets and of the economy as a whole.

Canada's pension system should be strengthened so it can continue to play an important role in our economy and contribute to efficiency of financial markets, Bank of Canada Governor David Dodge said today.

Up to now, world capital markets have been managing these imbalances in a reasonably smooth way. In the short term, it is reasonable to expect that they will continue to do so. But over the medium term, imbalances of this magnitude are not sustainable.

Mr. Dodge cited the promotion of flexible markets, the creation and maintenance of a sound financial system, and the pursuit of sound fiscal and monetary policies as priorities for policy-makers worldwide.

Speaking to the Board of Trade of Metropolitan Montréal today, Bank of Canada Governor David Dodge talked about the longer-term trends and the challenges facing the Canadian economy in the years ahead, and the adjustments that will be necessary to meet those challenges.

These are turbulent times, not just for business people, but for all Canadians. We have come through a very difficult year, a year filled with surprises that have challenged us all. At times like these, it is easy to focus on the near-term issues and problems.

Bank of Canada Governor David Dodge reviewed some of the developments that are influencing both demand and prices for Canadian goods and services in a speech today to the Conseil du patronat du Québec.