Real Time NewsCA: BOC

Carney: There Need for International Monitoring

Posted:19/11/2008 14:39 by Heddy Sorour

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In a speech addressing the UK Chamber of Commerce Mark Carney, governor of the BOC made some suggestion on building continuous markets. He said that even under stress core markets such as interbank lending, commercial paper and repo for high-quality securities must remain liquid. He also said that in order to achieve a full recovery, the global financial system must have continuously open markets at its core. In what he characterized as a “dispassionate” and “optimistic perspective,” on how sustainable markets can be built, Carney suggested that the G7 Plan of Action sets out a road-map to re-open markets. He also said that central bankers could act as market-makers of last resort, creating more systemic markets and making individual institutions less so. Carney focused on three flaws withing the global financial system: 1.lack of transparency 2.misaligned incentives 3.inadequate liquidity All three of these, he said, must be addressed, as they all contributed to the current market breakdown that's dragging out the global financial crisis. According to Carney while Canada is weathering the crisis better than most as a result of its tighter financial regulations, its economy is still feeling the pinch because of a deterioration in its terms of trade, and tight credit conditions outside its borders. "While good financial regulation begins at home, it is equally clear that it cannot end there. Even if the domestic system is sound, there is no guarantee that core financial markets will always be available," said Carney. "There is a pressing need for international institutions that effectively monitor systemic risk and coordinate macro-prudential and financial policy reform." click here to return to the top of the page

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