Bank of Canada Senior Deputy Governor Wilkins speech
Headlines via Reuters from the text of Wilkins' speech (bolding is mine)
- high global debt makes Canada, rest of world vulnerable to another period of financial instability
- trade war between US and China, growing geopolitical unrest are top of mind for bank; rising global debt "concerns me the most"
- "no one gains and everyone loses" in trade wars; end to US tariffs on steel and aluminum would be a welcome relief
- global financial system in a better place than in 2007, but uncertainties like trade tensions could "throw us off track"; high leverage an amplifying factor
- high household debt is "our number one domestic financial vulnerability"; Canada does not have same debt quality issues that u.s. had before 2008 crisis
- public debt in certain euro area countries a concern, those with weak fundamentals more prone to distress
- US and Japan make up largest share of public debt in advanced economies, but their debt poses less of a worry
- non-financial corporate debt poses a financial stability risk for China, could flow to Canada through lower demand for exports, lower commodity prices, turbulence to global financial markets
- investment funds, exchange-traded funds a concern because "we don't know how these funds will react when an adverse shock hits"
- more needs to be done to stress test new players in the system, including asset managers and non-bank financial institutions
- China taking action on more stringent regulation, financial sector supervision, but trade conflict makes "delicate balancing act" for authorities tougher
- a stable debt-to-GDP ratio does not guarantee financial stability; credible macroeconomic framework critical to maintaining faith in government creditworthiness, achieving growth
- makes no mention of need for future interest rate hikes
