These were my opening remarks for my appearance before the Canadian Senate Committee on Banking, Commerce and the Economy on November 20, 2024:
J’aimerais commencer en vous remerciant de m’avoir offert la chance de témoigner dans le cadre de votre étude sur le cadre de politique monétaire du Canada.
Much of my research is on the history of monetary policy and financial governance in the US, UK and to a lesser extent, Canada. What that research has taught me is that we are no longer in the era of the Great Moderation: the label we give to the period of macro-economic stability that lasted from the 1990s through to the 2008 global financial crisis—an era defined by low inflation and relatively few economic crises. Unfortunately, our era has a lot more in common with the 1970s and 1980s, a time of instability and significant economic and political shocks.
It also seems very likely that we will continue to live in a highly uncertain global economic environment in the coming years, given the current trends in geopolitics and the impact of the climate crisis. This heightened uncertainty will require more creativity and discretion from economic policymakers, including central bankers. More discretion in turn requires more robust forms of political accountability.
The Bank of Canada has an excellent international reputation, which is well-deserved, and it punches above its weight in international policy circles. It has also deal effectively with some very significant shocks in the last few years.
However, there is still room to improve, as the Bank of Canada remains behind its peers in terms of international best practice.
In particular, there is room to improve on governance, on transparency and on its mandate.
I am happy to elaborate on these areas in our conversation today. For now, I will close by noting that reforms in these areas will provide the Bank of Canada with the accountability that it needs to sustain confidence and build trust as we negotiate the challenging times ahead.
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