Reuters: US Dollar Report: HIGHLIGHTS-Bank of Canada's Carney speaks in Ottawa

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HIGHLIGHTS-Bank of Canada's Carney speaks in Ottawa Jul 18th 2012, 16:20 July 18 | Wed Jul 18, 2012 12:20pm EDT July 18 (Reuters) - Below are key quotes from an appearance by Bank of Canada Governor Mark Carney in Ottawa: ON BANK INVOLVEMENT IN SETTING LIBOR "We should recognize and I think the  best institutions do recognize they have a responsibility to remain in these panels and continue to post their estimates of where they can borrow in those horizons. After all, what is being asked of them, in most cases (they) have been doing, and I think we should be a little careful not to tar all institutions in the panel with the actions of some but what they've been asked to do is faithfully and consistently estimate the cost (at) which they borrow." "In terms of the alternatives, there is an attraction to moving to more, obviously, market-based rates if possible and in ... that may be different in different jurisdictions." "We may end up, we may, I don't want to prescribe, it's very early days, but we may end up with different types of rates used in different currencies and that's why I think  why there should be a desire, and I think there is a desire, to be coordinated as possible internationally." ON HELPING THE COMPETITION BUREAU "In terms of the specifics of the investigation, or the broad thrust of the investigation, the spring of last year the commissioner of the Competition Bureau reached out because of their role in the investigation for some technical assistance from the bank." ON WHEN HE LEARNED OF ISSUES AROUND LIBOR "I became aware of those as they emerged in the public domain in the spring of 2008. There were a number of, a few media stories related to that. This was at a time where ... governors of the major central banks were discussing acute stress in funding markets." ON POSSIBILITY LIBOR IS STRUCTURALLY FLAWED "The answer for what next for libor may be different depending on currency because there are different alternatives if libor cannot be fixed -- if it's structurally flawed and can't be fixed which is a possibility -- there may need to be different types of approaches and we need to think that through." ON FSB ROLE IN LIBOR "In my personal view as chairman of the Financial Stability Board ... potentially the Financial Stability Board can play a constructive role ... I'm not speaking for the FSB as a whole because I haven't done a complete consultation on it but my personal view is that the public sector, public authorities have to play the leading role in determining what next with libor and if not libor, what else and how to manage that transition because there has to be absolute confidence in this, number one." "Number two, the answer for what next for libor may be different depending on currency because there are different alternatives if libor cannot be fixed, if it's structurally flawed and can't be fixed, which is a possibility, there may need to be different types of approaches and we need to think that through." ON LESSONS FROM LIBOR "The lessons have not been learned fast enough. One should distinguish between institutions and specific behavior, but (it's) that they need to substantially raise their game to levels of conduct that in any other aspect of life are expected." ON STIMULUS "The stimulus into the economy has remained quite substantial. That stimulus is there for a reason. We're facing severe external headwinds from the U.S., from Europe ... a little has been taken off the table with respect to commodity prices and so what's important is the borrowing that's done, and borrowing will be done both by households and by businesses in Canada, that it is done sensibly by those who can bear the debt. ON HOUSEHOLD DEBT "We do expect household debt to increase over the projection horizon. There's been very strong activity in the housing market over the course of the last several months. There's normally a lag in terms of translation of that activity into the measured debt figures as mortgages are taken down. While we see a better evolution of the gap between household income and spending on consumption, spending on housing, that narrows, but it doesn't fully go away immediately so there is an additional increase, in our view of household debt." MONETARY POLICY PATH "We're as clear as we're going to be and as you can expect in terms of the path of monetary policy both in our forward looking statement and in the comments in the report." ON EUROPE'S DEBT CRISIS "What we're not saying in talking about the European crisis being contained is we are not predicting the timetable for successful resolution ... the probability of successfully refounding or relaunching European monetary union. There are some major substantial structural reforms that still need to be implemented and in our view there are additional measures that need to be taken across Europe in order to resolve the situation." ON PURPOSE OF EASIER MONETARY POLICY: "The purpose of accommodative monetary policy, and monetary policy has been considerably accommodative, has been to promote sensible investment and sensible borrowing for households." Link this Share this Digg this Email Reprints

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