The Bank of Canada: Moving Towards Transparency

During the 1990s the Bank of Canada made several changes that transformed its conduct of monetary policy. In the 1960s and 1970s, policy decisions were made in an environment characterized by instrument opaqueness and goal opaqueness, which tended to shield the Bank's operations from scrutiny and accountability. Since the 1970s the Bank has moved towards transparency and openness by rejecting multiple policy instruments and adopting a single, well-defined goal of inflation control. A recent survey has shown that the Bank of Canada is in the middle range of central banks with regard to its transparency and has lost points for not publishing the forecasts that shape its policy or the minutes and voting records of its governing body. Chant suggests that the public has benefited significantly from the changes the Bank has made, but that it should continue to support research on the benefits of low and stable inflation and continually inform other policy-makers and the public of the results.

Strengthening Bank Regulation: OSFI's Contingent Capital Plan

Bank failures around the world during the recent financial crisis put taxpayers on the hook for trillions of dollars in government backstopping. In future, requiring banks to issue contingent capital, which would convert from debt to equity when banks run into trouble, is one way to help avoid that happening again, and limit taxpayer costs if it does, according to this paper. The author makes the case for contingent capital, critiques the current federal proposal, and makes recommendations for design that would help stave off disaster for banks, not hasten their demise.Financial Services, bank failures, contingent capital, Office of the Superintendent of Financial Institutions (OSFT)

The Canadian Experience with Counterfeiting

Counterfeiting poses a significant public policy issue because of the important role that paper money plays in Canada's payments system. Yet the threat of counterfeiting in all economies has increased markedly in the past decade as a result of technological advances to photocopiers and computer printers. An appropriate pubic policy response is thus necessary to maintain the public's continued confidence in the national currency. To assess the threat from counterfeiting, including possible loss of confidence in the currency, estimating the stock of counterfeits circulating is necessary. In this article, Chant proposes a composite method of detecting counterfeits as an effective alternative to existing methods and offers estimates of the extent of counterfeiting Canadian currency for 2001. An Addendum to the article summarizes Chant's methods and updates the calculations to 2003.

Counterfeiting: A Canadian Perspective

Counterfeiting is a significant public policy issue, because paper money, despite rumours of its demise, remains an important part of our payments system. Various parties have a stake in the prevention of counterfeiting. For individuals and businesses, the share of counterfeits in outstanding currency indicates the likelihood that the next bill they receive will be counterfeit. For government, it indicates the extent to which the circulation of counterfeits displaces legitimate currency and reduces its seignorage benefit from the right to issue currency. Most significantly for monetary authorities, it indicates the degree to which counterfeiting challenges the integrity of the nation's currency. The author considers the economic issues that counterfeiting raises. He proposes an innovative method for estimating the quantity of counterfeit currency in circulation and develops estimates for Canada for 2001. Such a measure can make a significant contribution to public policy by providing a basis, through international comparisons, for assessing the effectiveness of different currency features in combatting counterfeiting.Bank notes

Keeping the Genie in the Bottle: Grading the Regulation of Canadian Financial Institutions

The Canadian financial sector made it through the recent global credit crisis in better shape than most. Still the government undertook extraordinary measures to support the soundness of Canadian financial institutions. Fortunately, Canadians learned the lessons of the world banking crisis at lower cost than others. They may not be so lucky the next time. Canada’s approach to regulation includes many features that have been effective in insulating its financial sector from major shocks. Its principles-based approach has proven more adaptable to emerging financial innovations than the rules-based approaches as adopted in the U.S. By favouring permission over prohibition, it has allowed beneficial financial innovations to thrive, while leaving regulators able to step in when innovations appear harmful to the stability of the system. On the whole, Canada’s regulatory approach is, put simply, simpler and reduces the costs of compliance and enforcement. Significantly, it has remained immune from the toxic political influences that overshadow U.S. regulation. None of this guarantees that the Canadian approach to regulation is fail-proof. The Canadian financial sector has a few large banks – some with assets ranging up to 50% of GDP – who could be categorized as “too big to fail.” Deposit insurance rates remain low and insurer’s reserves are not sufficient to shield the Canadian public from the costs of institutional failure. Despite the good job in fostering a stable environment, Canadian regulators must still face a number of issues. Each financial crisis is different and future crises are always over the horizon. Success in avoiding the brunt of the last crisis does not guarantee that Canadian financial institutions will escape unscathed from the next one. Also, fast paced innovation puts regulators in a continual game of catch-up. The rapid growth of shadow banks and over-the-counter derivatives contributed to the last crisis and the issues they raise have yet to be resolved. Finally, the success of international efforts to reverse “too big to fail” by allowing troubled financial institutions to fail safely cannot be assured. It requires authorities to close failing institutions promptly but history suggests that delay may appeal to regulators. They may hope that an institution, if given time, can recover. They may also fear fuelling a financial crisis by repeating the distress unleashed by the failures in the last crisis. With no chance for a trial run, regulators may be forced to bailout failing institutions in the heat of a crisis. To prevent such an outcome, regulators must strengthen measures to ensure that major institutions are too safe to fail

A systematic review of mortality in schizophrenia - Is the differential mortality gap worsening over time?

Context Despite improvements in mental health services in recent decades, it is unclear whether the risk of mortality in schizophrenia has changed over time. Objective To explore the distribution of standardized mortality ratios (SMRs) for people with schizophrenia. Data Sources Broad search terms were used in MEDLINE, PsychINFO, Web of Science, and Google Scholar to identify all studies that investigated mortality in schizophrenia, published between January 1, 1980, and January 31, 2006. References were also identified from review articles, reference lists, and communication with authors. Study Selection Population-based studies that reported primary data on deaths in people with schizophrenia. Data Extraction Operationalized criteria were used to extract key study features and mortality data. Data Synthesis We examined the distribution of SMRs and pooled selected estimates using random-effects meta-analysis. We identified 37 articles drawn from 25 different nations. The median SMR for all persons for all-cause mortality was 2.58 (10%-90% quantile, 1.18-5.76), with a corresponding random-effects pooled SMR of 2.50 (95% confidence interval, 2.18-2.43). No sex difference was detected. Suicide was associated with the highest SMR (12.86); however, most of the major causes-of-death categories were found to be elevated in people with schizophrenia. The SMRs for all-cause mortality have increased during recent decades (P = .03). Conclusions With respect to mortality, a substantial gap exists between the health of people with schizophrenia and the general community. This differential mortality gap has worsened in recent decades. In light of the potential for second-generation antipsychotic medications to further adversely influence mortality rates in the decades to come, optimizing the general health of people with schizophrenia warrants urgent attention

Patterns of bud-site selection in the yeast Saccharomyces cerevisiae

Cells of the yeast Saccharomyces cerevisiae select bud sites in either of two distinct spatial patterns, known as axial (expressed by a and alpha cells) and bipolar (expressed by a/alpha cells). Fluorescence, time-lapse, and scanning electron microscopy have been used to obtain more precise descriptions of these patterns. From these descriptions, we conclude that in the axial pattern, the new bud forms directly adjacent to the division site in daughter cells and directly adjacent to the immediately preceding division site (bud site) in mother cells, with little influence from earlier sites. Thus, the division site appears to be marked by a spatial signal(s) that specifies the location of the new bud site and is transient in that it only lasts from one budding event to the next. Consistent with this conclusion, starvation and refeeding of axially budding cells results in the formation of new buds at nonaxial sites. In contrast, in bipolar budding cells, both poles are specified persistently as potential bud sites, as shown by the observations that a pole remains competent for budding even after several generations of nonuse and that the poles continue to be used for budding after starvation and refeeding. It appears that the specification of the two poles as potential bud sites occurs before a daughter cell forms its first bud, as a daughter can form this bud near either pole. However, there is a bias towards use of the pole distal to the division site. The strength of this bias varies from strain to strain, is affected by growth conditions, and diminishes in successive cell cycles. The first bud that forms near the distal pole appears to form at the very tip of the cell, whereas the first bud that forms near the pole proximal to the original division site (as marked by the birth scar) is generally somewhat offset from the tip and adjacent to (or overlapping) the birth scar. Subsequent buds can form near either pole and appear almost always to be adjacent either to the birth scar or to a previous bud site. These observations suggest that the distal tip of the cell and each division site carry persistent signals that can direct the selection of a bud site in any subsequent cell cycle