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Over the past 20 years, there has been a major shift away from the use of paper-based retail payment instruments, such as cash and cheques, toward electronic means of payment, such as debit cards and credit cards. Recent Bank of Canada research on consumers’ choice of payment instruments indicates that cash is frequently used for transactions with low values because of its speed, ease of use and wide acceptance, while debit and credit cards are more commonly used for transactions with higher values because of perceived attributes such as safety and record keeping. While innovations in retail payments currently being introduced into the Canadian marketplace could lead to a further reduction in the use of cash over the longer term, the implications for the use of cash of some of the structural and regulatory developments under way are less clear.

Results from the Business Outlook Survey and the Business Leaders’ Pulse indicate that firms’ sentiment has improved. Responses were mostly gathered before the start of the war in the Middle East. Fewer businesses reported being affected by trade tensions with the United States, and many expect sales growth to improve. Most businesses plan to maintain or slightly increase current staffing levels and investment spending. One-year-ahead inflation expectations have ticked up slightly. Results of follow-up calls made after the start of Iran war suggest that many firms are already facing higher input costs related to the war due to rising prices for energy, fertilizer and freight.

I analyze the relationship between carrying a credit card balance and future financial stress. I find that carrying a balance significantly increases the likelihood that credit card holders miss future debt payments. This likelihood tends to rise as credit card balances grow and are held for long periods.

Responses to the autumn Business Outlook Survey indicate that near-term business prospects continue to be robust. Strong demand and elevated capacity pressures support firms’ investment and employment intentions.

The Bank of Canada’s Communications Department has developed a framework to quantify and qualify the Bank’s communications efforts and their results. Using data-based measurement and evaluation, the department can assess the impact of the Bank’s communications activities and gauge the department’s contribution to the Bank’s overall goals.

Executive Director of Payments, Supervision and Oversight Ron Morrow discusses advancements in how Canadians pay for things, and why Canada needs to do more to get ahead. He also explains the Bank of Canada’s new role as the regulator for payment service providers.

Core inflation has been higher than anticipated in recent months. This reflects not only a stronger-than-expected increase in premiums for auto and home insurance, but also some broadening of price pressures resulting from strong demand in the economy.

Solving macroeconomic models is difficult. One challenge is the occasionally binding constraint of the zero lower bound on nominal interest rates. This paper reviews various ways to solve models that include this feature.

Canada's economic outlook has improved significantly since the November Monetary Policy Report. Indeed, information on the fourth quarter of last year and the first quarter of 2002 indicates that the recovery in the Canadian economy began sooner and has been considerably stronger than anticipated.

I study how banking market concentration and reliance on wholesale funding affect monetary policy transmission to mortgage rates. I find that this transmission is imperfect and dampens the response of consumption, output, and housing prices.