But deputy governor Carolyn Wilkins says we can't afford to be complacent amid worsening global outlook
Many analysts are predicting a global recession, although there is no consensus as to when that may be. But Canada is ready.
In a speech Tuesday, Bank of Canada deputy governor Carolyn Wilkins said that, despite the global outlook, the Canadian financial system is strong, prepared, and able to deal with whatever happens.
Speaking to an audience at the International Finance Club of Montréal, she highlighted some of the external risk factors including trade wars, and financial stability - including debt levels- that are higher than before the Great Recession.
But she said that policy decisions such as tighter mortgage lending rules, local tax measures, and higher interest rates have helped address rising household debt; and there have been several measures to bolster the banking system.
“The global context has worsened, increasing risks to the global expansion and the chances of financial stress,” Wilkins said. “In the unlikely event of a storm, Canada’s financial system is resilient, and we are in a good position to deal with whatever comes our way.”
No need to be concerned then?
Echoing the views of OSFI which set out its plan to further strengthen the financial system earlier this year, Wilkins warned against complacency despite Canada’s resilience.
“This is not the time to let our guard down,” she said. “Robust defences are especially important when difficulties abroad could affect us at home.”
Climate change data
The deputy governor also talked about the bank’s plan to improve research into the impacts of climate change.
The BoC wants to better understand how climate change could affect its policy decisions and forecasting, as well as its impact – and that of transitioning to a low-carbon economy – on Canada’s financial system.
“This is the start of a long journey, and we are partnering with others to make progress,” she said. The Bank is “engaging with others to better understand how companies and investors are assessing and mitigating climate risks.”
Canada has made progress toward taming household indebtedness 🏘️ 💳 and safeguarding the #economy against other vulnerabilities. So why isn’t it time to let our guard down? Senior Deputy Governor Wilkin explains. https://t.co/6AuVLE1FOr pic.twitter.com/SPSTCJtSeb
— Bank of Canada (@bankofcanada) November 19, 2019
