In doing so however, the financial system is expected to absorb real economic surprises and shocks. If for some reason this is not done well, it could impair the efficient functioning of the financial system as a whole and engender financial instability. But we need to be careful in thinking about financial instability.
Growth is strong, sustainable, and balanced. There is no doubt we would all be much better off with the last scenario (Table 1). By 2015, the difference in the level of global GDP between the deflation and framework scenarios is about 12 per cent (Chart 6). 18 For Canada, the difference would be 10 per cent of Canadian GDP.