So, what about the argument that the authorities should assign regulatory and supervisory measures to financial imbalances? My answer is simple: we need to employ appropriate monetary policy in tandem with regulations and supervision. It does not seem promising to address financial imbalances only through macroprudential measures and regulations without monetary policy responses.
Here, I am referring to sectors such as auto parts, textiles, and clothing manufacturing. Firms in these sectors are feeling the pressure of the higher Canadian dollar, and are also facing increased competition from places such as China and India. The good news is that there is evidence that many of these firms are making adjustments in the face of adversity.