In this environment, the Bank judges it appropriate to maintain the considerable monetary stimulus in place. This stimulus has been further enhanced by the sharp fall in global riskfree yields, which is providing further support to the Canadian economy through our wellfunctioning financial system.
A central feature of the shadow banking system is regulatory arbitrage: activities are shifted from the banking system to the shadow banking system in order to evade regulation. A geographically fragmented approach to regulation would not curb regulatory arbitrage but just take it to another level.