Particularly in the case of emerging economies, threats to financial stability come from the macro environment, and depend largely on the way macroeconomic policy is conducted. Reinhardt and Rogoff illustrate that financial crisis tend to cluster in history, and are related to the volatility of capital inflows and commodity prices.
6 In this environment of slow global economic growth and uncertainty about demand, firms have also tempered their sales expectations for the next 12 months. However, while Canada’s economy is being affected by the global angst, the key areas of uncertainty abroad are all points of justifiable confidence here at home. Canada’s public finances are sound. Monetary policy is clear and credible.