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Despite the efficiency gains that accompany automation, most large futures exchanges have been reluctant to move away from the traditional trading floor, citing early evidence that open outcry exchanges were more liquid than electronic exchanges. More recent studies, however, suggest that electronic trading is superior to open outcry in many respects, including liquidity. In this article, the author compares the two trading systems. Although many exchanges are shifting towards electronic trading, there are still several obstacles to this transition. But as technology rapidly reduces the cost of automation and increases the demand for global 24-hour trading, a worldwide transition to electronic order-matching will likely be the next important milestone for futures exchanges. Less-automated exchanges (including the Canadian futures exchanges) will undoubtedly continue to study and promote automation in order to keep pace with technological innovations.

At the 12th annual Bank of Canada economic conference, held in Ottawa on 4 and 5 December 2003, representatives from various public and private organizations and Bank of Canada staff discussed papers presented on three key issues affecting the financial system: financial contagion, the implications of bank diversification, and financial sector regulation. Papers on financial contagion studied the effect of globalization on Canadian foreign-asset exposures, developed a general-equilibrium model of a competitive interfirm lending market in which firms can borrow or lend, and used market-based indicators to determine the probability that contagion can be generated by interbank exposures. The papers on bank diversification focused on the links between the changing behaviour of financial institutions and risk-return trade-offs. Issues of financial sector regulation included the relationship between governance and financial sector soundness, the theoretical basis of bank regulations for capital requirements, and the implications of bank capital requirements for the transmission of monetary policy. A panel discussion provided extended discussion of the conference papers.

We help manage the benefits and risks of fintech and digital currencies at the international level through our work with the Financial Stability Board, the International Monetary Fund and the Bank for International Settlements.

Governor Tiff Macklem discusses the Bank of Canada’s renewed monetary policy framework. He reviews Canada’s experience with flexible inflation targeting and explains why the Bank and the Government of Canada agreed to renew the 2 percent inflation target.

The Annual Report outlines the Bank’s activities and achievements in 2018. It includes the financial statements and a message from Governor Stephen S. Poloz.

The recent dislocations in credit markets have brought these issues into sharp focus. Among other things, the market turbulence has highlighted the critical role that confidence and liquidity play in financial markets.

At the Bank of Canada, we’re pleased to offer awards for research papers by students and by staff.

Deputy Governor Lynn Patterson discusses the efforts in multiple jurisdictions to strengthen LIBOR and similar benchmarks and work underway in Canada to consider a new risk-free benchmark for the Canadian dollar market.

As we celebrate the 400th anniversary of the founding of Quebec, I thought it would be fitting for me, as a central banker, to take a look at how money has evolved over part of the past four centuries.

There is an old saying, “Knowledge is gained from experience, and experience is gained from mistakes.” In Canada, we made our mistakes early and often in the 1970s and 1980s. Our fiscal situation deteriorated sharply, inflation surged to double-digit levels, and a few small regional banks collapsed.