Op-Eds
Published in Canadian Business on October 29, 2012 (posted on the Canadian Business website on Oct. 16, 2012)
By William Robson
Central bankers responded to the 2008 crisis with massive support for the world’s financial system. These bold moves made heroes of U.S. Fed chairman Ben Bernanke, Bank of Canada governor Mark Carney, and their colleagues overseas. Four years later, however, major economies are still struggling. There is a troubling sense the heroes have lost their touch.
The Fed’s September pledge to keep interest rates ultra-low until the U.S. economy gets moving included a commitment to buy more long-dated government bonds and mortgage securities to push long-term yields down. Commentators and…
Published in the Financial Post on June 5, 2012
By Finn Poschmann
What makes a good currency area?
It was a popular question in the 1990s and later. Political leaders in France and Germany were convinced they knew the answer: Whatever was the definition of a good currency area, the two of them had to be in one, along with their economically and politically similar geographic neighbours.
Their counterparts in southern Europe knew that whatever the answer was, they wanted to be in one, too; and in the United Kingdom, the government knew that whatever the answer was, they did not. Elected princes in Denmark pondered whether to be, or not to be, part of the euro, gave up, and asked their voters — who said no.…
Published in the Financial Post on May 8, 2012
By Finn Poschmann
Based on the results of elections in France and Greece, the odds of a euro currency implosion have gone up.
The outcomes of loud, divisive and ostensibly important elections in Europe have rolled in.
In France, the charming and occasionally conservative Nicolas Sarkozy fought a losing rearguard action against the steady assault of his Socialist challenger for the presidency, François Hollande. Sarkozy’s loss signals the obstreperous French electorate’s rejection of post-crisis fiscal austerity measures, measures set in motion by Sarkozy and which, for the most part, they have yet to experience.
Perhaps more than that, the result signals…
Published in the Financial Post on March 8, 2012
By Pierre L. Siklos
The Bank of Canada is widely expected to announce Thursday that it is leaving its target for the overnight interest rate unchanged at 1%. Beyond this announcement, however, the future value of the overnight rate, and of other rates that tend to move in tandem, such as mortgage rates, look much more uncertain. In the hope of getting a glimpse into the bank’s thinking about the future, monetary-policy watchers will carefully analyze the language of its communiqué, the source of clues about what the bank might do next.
Meanwhile, in the United States, monetary-policy watchers just got a valuable new tool in their hunt for clues about where interest…
Published in the Financial Post on November 10, 2011
By Philippe Bergevin and Finn Poschmann
This past Tuesday, the government and the Bank of Canada announced that the bank’s operating framework would be renewed for another five years. The bank’s main objective will continue to be keeping inflation, expressed as the 12-month rate of change in the consumer price index, near the 2% midpoint of the 1% to 3% inflation-control range — business as usual, it seems.
The announcement referred, however, to “Canada’s flexible inflation-targeting framework,” and what is new is the word “flexible” — perhaps business is not so usual. The concept of a flexible framework is slippery, and potentially dangerous, and one that risks…
