Financial risk weighs less on monetary policy - Bank of Canada

Reuters

MONTREAL, Nov 18 (Reuters) - The financial reform agendapursued by the Group of 20 leading economies has reduced therisk of a financial collapse, taking some pressure off centralbankers, Bank of Canada Senior Deputy Governor Tiff Macklem saidon Monday.

"The substantial progress achieved in implementing the G20financial reforms has made the global financial system safer,"Macklem said in prepared remarks for a panel discussion at aMontreal conference.

"Correspondingly, this risk is now weighing less on ourmonetary policy decisions. For me, at least, that's one measureof progress," he said.

Macklem said the job is not yet finished, however, and heoutlined four areas where regulators and banks must do morework:

-setting leverage limits for banks;

-establishing a "bail-in regime", which allows failing banksto be recapitalized;

-further strengthening the central counterparty system andimproving banks' risk disclosure;

-governance and culture of ethical practices.

Macklem provided no guidance on the Bank of Canada'smonetary policy or its outlook on the economy.

The central bank signaled last month it has no plans totouch interest rates anytime soon, a major policy shift after 18months of suggesting rate hikes were on the horizon. Inflationhas been persistently weak and growth disappointing. But thecentral bank suggested rate cuts are off the table for nowbecause of record-high levels of personal debt.

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