Can Canada improve on its successful monetary order based on a 2 percent inflation target when it expires in 2011? Yes – better price measures, a lower inflation or price-level target, and stronger accountability could better preserve the value of Canadians’ money.

Financial instruments indexed to the general price level are of great potential use to borrowers and lenders alike. But up until recently, they have been relatively scarce – in part because private borrowers dislike offering protection against inflation that they do not control. Since the...

A lively debate is underway about replacing Canada’s 2 percent inflation target with a target for lower inflation or a target for the price level itself when Canada’s inflation-control arrangement expires at the end of 2011. Either change could reduce uncertainty about changes in the value...

The relative soundness of the Canadian domestic financial system throughout the crisis suggests that Canada’s regulatory framework does not require a major overhaul. But Canada could benefit if other countries introduced reforms to improve their macroeconomic stability. Other reforms are needed.