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The year 2006 marked a turning point for the Bank of Canada. We successfully completed our medium-term plan, The Way Forward, and began writing a fresh chapter in the Bank’s history based on a new three-year plan. In this annual report, we do more than give an accounting of past achievements. We also provide forward-looking information on the plans and priorities in our new medium-term plan. And as we advance, we are always mindful of the Bank’s original mandate, set out more than 70 years ago, to “promote the economic and financial welfare of Canada.”

We analyze the impact of interest rate policy on financial stability in an environment where banks can experience runs on their short-term liabilities, forcing them to sell assets at fire-sale prices.

Businesses are more optimistic about the economic outlook than in the winter survey. The greater stability of the Canadian dollar in the three months since the previous survey has helped to ease concerns among exporters. Businesses continue to expect strong domestic sales.

We present a two-country model featuring risky lending and cross-border interbank market frictions.

Responses to the winter survey suggest that the global economic outlook and concerns about demand continue to weigh on firms’ expectations for business activity.

This monthly newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

Canadian real GDP growth is projected to average around 2 ¼ per cent during 2014-2016.

This monthly newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

Deputy Governor Tim Lane discusses the global economic outlook and the integral – and historic – role of transport and logistics in building Canada’s prosperity.

The sharp depreciation of the Canadian dollar and the successful launch of the euro have sparked a lively debate in Canada about the possible benefits of formally adopting the U.S. dollar as our national currency. Some observers have suggested that this debate is largely irrelevant, since Canada is already highly "dollarized." Canadian businesses and households, they assert, often use the U.S. dollar to perform standard money functions in preference to their own currency. Very little evidence has been provided, however, to support these claims. The authors review the available data with a view to drawing some tentative conclusions about the extent to which Canada has already been informally dollarized. The evidence suggests that many of the concerns that have been expressed about the imminent demise of the Canadian dollar have been misplaced. The Canadian dollar continues to be used as the principal unit of account, medium of exchange, and store of value within our borders. Moreover, there is no indication that dollarization is likely to take hold in the foreseeable future. Indeed, in many respects, the Canadian economy is less dollarized now than it was 20 years ago.