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Governor Gordon Thiessen today talked about the steps that Canada should take to preserve the current economic expansion and improve performance over the long run, in particular by reaping some of the potential gains from the technological revolution that is now sweeping the world.

The Canadian economy is carrying untapped potential that could prolong the expansion without causing inflation pressures, Governor Stephen S. Poloz said today. In a lecture at Queen’s University, Governor Poloz said that the Canadian economy is currently in the phase of the economic cycle where companies need to expand capacity to meet rising demand. “Growing […]

In a competitive sales environment, merchants are compelled to offer consumers the option of paying for goods and services using a variety of payment methods, including cash, debit card, or credit card. Each method entails different costs and benefits to merchants. To better understand the costs of accepting retail payments, the Bank of Canada surveyed over 500 Canadian merchants and found that most consider cash the least costly. This article investigated this perception by calculating the variable costs per transaction of accepting different means of payment. The findings are that costs for each payment method vary by merchant and transaction value, with debit cards the least costly payment for a broad cross-section of merchants.

The issue addressed in this article is the extent to which monetary policy in Canada should respond to asset-price bubbles. The article concludes that maintaining low and stable consumer price inflation is the best contribution that monetary policy can make to promoting economic and financial stability, even when the economy experiences asset-price bubbles. In extreme circumstances—when an asset-price bubble is well identified and likely to have significant costs to the economy when it bursts—monetary policy might better maintain low and stable consumer price inflation by leaning against a particular bubble even though it may mean that inflation deviates temporarily from its target. Such a strategy might reduce the risk that a crash in asset prices could lead to a recession and to inflation markedly below target in the longer run. The circumstances where this strategy is possible will be rare because economists are far from being able to determine consistently and reliably when leaning against a particular bubble is likely to do more harm than good. Housing-price bubbles should be a greater concern for Canadian monetary policy than equity-price bubbles, since rising housing prices are more likely to reflect excessively easy domestic credit conditions than are equity prices, which are largely determined in global markets.

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.

This is the fourth of the Financial Markets Department’s descriptions of Canadian financial industrial organization. The paper discusses the organization of the securities lending market in Canada. We outline key characteristics of securities lending contracts, participants in the securities lending market, the market infrastructures that support securities lending activities, and aggregated statistics describing the Canadian market.

Deputy Governor Toni Gravelle provides an assessment of risks to the stability of the Canadian financial system, including risks stemming from the COVID-19 pandemic.

Governor Mark Carney announces the entry into circulation of the new $20 polymer bank notes.

Deputy Governor Lawrence Schembri opens the Bank’s Monetary Policy Framework Issues: Toward the 2021 Inflation-Target Renewal workshop.