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Canada's First Coinage

Photography by Gord Carter, Ottawa.

The year 2007 was marked by sharply increased volatility in financial and foreign exchange markets, and a widening of credit spreads. Despite financial market turbulence, the Canadian economy continued to expand, and inflation remained close to our target of 2 per cent. In this, my final Annual Report message, I begin by reviewing the economic and financial developments and challenges of the past year. I then highlight seven important ongoing challenges faced by Canada and the Bank during my seven years as Governor.

The Canadian economy grew broadly in line with the Bank’s expectations in the second half of 2007.

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Roman Antoninianus

The coins form part of the National Currency Collection of the Bank of Canada.
Photography by Gord Carter, Ottawa.

Overall, firms remain positive about the outlook, with the results of the winter survey showing little change from those of the autumn survey. Nonetheless, firms reported more uncertainty in light of recent developments, most notably the volatility in the value of the Canadian dollar.

The financial system makes an important contribution to the welfare of all Canadians. The ability of households and firms to confidently hold and transfer financial assets is one of the fundamental building blocks of the Canadian economy.

The inflation targeting framework that Canada introduced in 1991 has played a significant role in the exceptional economic performance that the country has experienced in recent years. Understanding the factors that have contributed to the success of the current inflation-targeting framework, and investigating the various ways in which it might be improved in the future, are an important part of the Bank of Canada's medium-term research program.