Thank you, Mr. Chair.
I would like to thank both Mr. Macklem and Mr. Carney for joining us.
Mr. Carney, you will not remain in your position for much longer. I would like to congratulate you and thank you for bringing Canadian know-how elsewhere in the world. I really appreciate what you are doing, although I am sorry that we are going to be losing you for a few years. But that is another issue.
Governor Carney, I truly appreciated the comment you made at the end of your presentation when you talked about the current monetary easing, which is significant. That says a lot. I believe that your comment pertains to the particular situation that we are experiencing right now in Canada with respect to interest rates and all of the factors that have an impact on our economy.
I would like to discuss a particular topic with you, namely, the record levels of cash assets sitting in our Canadian businesses. According to a January 2013 analysis produced by the Royal Bank of Canada, this number is currently $574 billion. Cash assets must now have grown considerably since then. It is interesting to see that, according to this analysis, this situation is explained by objective factors. I appreciate this point in particular as I am reading an economic essay written by Ms. Esther Duflo, who sits on a poverty panel advising the U.S. President. She looks at individual behaviour to explain certain consequences of objective decisions that are made.
Going back to the Royal Bank report, it looks at a range of factors, focusing on three important ones in particular, to explain this accumulation of cash assets, namely, uncertainty related to the international situation, deficits created by defined benefit pension funds, and changes within businesses to intangible assets, namely intellectual property. Businesses have changed a great deal. The knowledge-based economy has to a large extent replaced the production of yesterday. In your analysis, you say that we can be relatively optimistic about the ability of U.S. demand to help the recovery of the Canadian economy. You say that this could have an impact on current uncertainties, which would explain this accumulation of capital.
I would like you to talk about the pension fund deficits, and, in particular, the weak interest rates, which unfortunately offer few benefits. You have already made some comments on this issue.
How optimistic are you that we will see a rise in the key policy rate in the near future?
How will this help us deal with the deficit created by defined benefit pension funds?