While progressively providing greater flexibility to banks in their portfolio decisions, relative to the situation before the reforms, we have kept a close eye on the risk exposure of regulated financial institutions. We have therefore been cautious about derivatives and are introducing them gradually, based on our perception of the risk management capabilities of the various regulated institutions.
The Bank judges that the economy is now operating further above its production potential than was projected in April. The Canadian economy is now projected to grow somewhat more strongly in 2007 and somewhat more slowly in 2008 and 2009 than we previously projected.