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...

Our understanding of the links between the financial sector and the rest of the economy needs to improve concludes this report. The authors say that the complexity of these linkages have been neglected in the models typically used to guide monetary policy - the question is how to remedy...

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 of...

The asset-backed securities (ABS) market suffered a major setback during the financial crisis that began in 2007. Its role in the broader market collapse has been well documented, but the need to restore a healthy ABS market is equally clear. Indeed, North American policymakers have readily...

The Bank of Canada should pay closer attention to the effects of money and credit growth on inflation and asset markets. The authors contend that maintaining price stability should remain the Bank's only formal goal, but say greater attention should be paid to asset market stability. Once the...

Credit rating agencies have been blamed for their role in the recent financial crisis, notably for having assigned high ratings to complex financial instruments that yielded billions in losses to investors. As a consequence, a number of reforms have been proposed or introduced – including for...

As new entrants arrive in Canada's debit card market, rule changes are needed to ensure a level playing field, and to enhance the potential benefits of competition for consumers and merchants. In a study released today, the author assesses the implications of the rapidly changing debit payment...

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...

The Bank of Canada needs a better inflation indicator that is more sensitive to swings in house prices than the Consumer Price Index (CPI). The author points out that the CPI has not usefully reflected the rapid run-up in housing prices in recent years. He proposes a new official inflation...

Canadians are avid users of debit and credit cards and other electronic payment options. Compared to consumers in other countries, they are among the heaviest users of debit cards to make purchases at retail stores. But Canada's payment system has fallen behind – cell phones with payment...