Fiscal policy concerns, at times coupled with political uncertainty, proved to be a volatile mix and led to serious financial market turbulence and speculative pressures, complicating the task of monetary policy. Fortunately, the situation has recently improved considerably. Inflation in Canada is stable, at its lowest level in decades. And it has been somewhat below that in the United States since 1992.
Our discussion today is meant to provide inputs for the assessment of policies that could help improve the banking system’s risk management processes and efficiency as well as provide a leverage to stimulate the diagnosis of, and improvements in, the supervisory framework. I take a special interest in today’s topic for two main reasons.