I want to leave you with a few key messages. The decline in inflation since the summer is a welcome relief for the many Canadians who are struggling to keep up with the rising cost of living. But at more than 6%, inflation remains too high.
However, in reflection of supervisory concerns and judgment, we will propose that estimates of loss given default - a key risk parameter under Basel II - for CRE loans on in-place properties be based on historical loss rates during periods of high default. This approach, we believe, will capture some of the risk that has historically accompanied such exposures.