However, history shows that  BIS Review 9/2004  3  pricing financial assets appropriately in real time can be extremely difficult and that, even in a seemingly benign economic environment, risks remain. The outlook for the federal budget deficit is another critical issue for policymakers in assessing our intermediate- and long-run growth prospects and the risks to those prospects.
Canada is running a record trade surplus. Federal and provincial governments are reducing their public debts. Canada is reducing its net foreign indebtedness. And there has been a surge in investment in equipment and technology that is essential for rising productivity and improved standards of living. Canada's strong fundamentals should operate in favour of the Canadian dollar over time.