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A retrospective of economic research at the Bank of Canada from 1935 to 1965.

A year of financial market strains and economic disruption in 2009 gave way to initial signs of progress in 2010, the year the Bank of Canada celebrates its 75th anniversary. The lessons of the past year vividly illustrate what the Bank has demonstrated repeatedly through seven and a half decades: the value of well-researched policy frameworks and decisive action.

The survey results point to an overall easing in business-lending conditions during the second quarter of 2010. Both the price and non-price aspects of business lending eased during the quarter. Note that the balance of opinion indicates only the direction of the change in lending conditions; it does not provide information on the magnitude of the change.

For the first time in two years, firms, on balance, reported an improvement in their past sales activity. While the balances of opinion on future sales growth and investment are lower than in recent surveys, and firms are concerned about global uncertainties, overall, they are positive about the outlook for business activity over the next 12 months.

Bank of Canada published a report establishing a set of principles to guide the extraordinary liquidity interventions it was making in response to the systemic shocks buffeting the Canadian financial system. These principles provided a framework for maintaining consistency between the Bank’s actions and its responsibilities as lender of last resort to the financial system, while allowing sufficient fl exibility to respond to the unique challenges of the crisis.

Risks to the stability of both the Canadian and the global financial systems appeared to be diminishing for most of the period since the last Financial System Review (FSR), as the recovery in financial conditions and the macroeconomic environment continued to solidify.

FSR Highlights - June 2010