Finance committee  It is not a question of... It might be a tool; it depends on what we mean by “tool”.

Finance committee  At the moment, we have a flexible exchange rate, a floating exchange rate. The Bank of Canada does not actually have an exchange rate target. It is not a tool that we use. As I was saying earlier, the so-called reaction function of the Bank of Canada has to do with the inflation rate, period.

Finance committee  ... there are other aspects. The exchange rate stems from that, but it is not...

Finance committee  Maybe I could answer very quickly. I think it's primarily a fiscal policy issue, needless to say. How do we deal with being able to meet a certain income level so you can reduce your debt load, etc.? As a household you should be de-leveraging somewhat at this point, given the current environment.

Finance committee  First, very quickly about Saudi Arabia and all of that, I mentioned that simply because the Canadian dollar largely has become a petro-currency. That's not to suggest that we are like Saudi Arabia in terms of processing end, of course. However, with regard to the issue of how we deal with matters to do with, in this case, the fiscal side of things, I'm one of those who believes very strongly in functional finance here.

Finance committee  Absolutely, except that I don't agree in the recent one right now. I mean since 2010--

Finance committee  What we did immediately after--

Finance committee  Thank you for your questions. I am going to answer quickly. First of all, I am very familiar with the Dutch disease. We actually have a problem. We have a flexible exchange rate that essentially reacts to what is happening, since the Canadian dollar has become a type of oil currency, the way it is in Saudi Arabia.

Finance committee  It's not that the Bank of Canada doesn't have an implicit target of unemployment, it does implicitly, because it believes in some notion that there's a kind of NAIRU out there, a non-accelerating inflationary rate of unemployment. So what it wants to do is keep that economy within a certain band, which has prevented unemployment in Canada from going below 6%, basically, if you look at the last 20 years.

Finance committee  I think we need a broader band or range, as indeed Jim was also suggesting, but also we should include another variable in there. If you take the U.S. case, it's governed essentially by the Humphrey-Hawkins Full Employment Act of 1978, and they're still committed to those basic principles that guide the governor of the Federal Reserve as well, which includes unemployment there.

Finance committee  Jim already mentioned in his presentation that the Bank of Canada has been a little more flexible than simply the inflation target in a reality. If you look at what they did, for instance, in April 2009 all the way to June 2010, where they pegged the overnight rate at the lowest possible level and left it there, that would suggest that maybe they were very concerned about the crisis at that time and acted appropriately, I would say, in this case, just as the Federal Reserve is doing right now.

Finance committee  Seccareccia.

Finance committee  I'll do my best. Thank you, Mr. Chair, for inviting me here. I'm quite privileged and honoured to be among my fellow economists, especially here. I read through the background information, the report that was circulated on the net, regarding the renewal of inflation targeting by the Bank of Canada.