Thank you very much. We promise that we will combine well within the five minutes.
Good afternoon, Mr. Chairman and members of the committee. Thank you very much for your very kind invitation to join you today.
As you will note from my bio, I have more than 35 years' experience in dealing with financial sector policy issues in Canada and abroad. This past year, I helped prepare three papers for the C.D. Howe Institute that might be of interest to you in your deliberations.
The first one explored modern monetary theory, or MMT. It concluded that MMT overstates the degree of monetary sovereignty that countries such as Canada enjoy in a world where capital is mobile.
The second paper offered some lessons on how public accountability could be injected into the OSFI's supervision of financial institutions.
The most recent paper discussed the emergence of cryptocurrencies and promoted the introduction of a digital Canadian dollar by the Bank of Canada to support the development of Canadian dollar-linked cryptocurrencies by the private sector. It also argued in favour of having the digital currency issued in token form so that most of the benefits that Canadians currently enjoy with paper money can be retained.
Finally, given my past experience, let me note that Canadians and Canadian businesses now stand out for being among the most highly levered in the industrialized world.
Why does this matter? Well, I believe the tailwind of falling interest rates and rising asset prices over the past 40 years has helped to contain credit risk in our financial system, but this tailwind has dissipated and may become a headwind going forward. If I am right, then life may become more uncomfortable in the future for our highly levered private sector than conventional credit-risk metrics might suggest. This underscores the need to have some flexibility in our public finances to respond to future shocks.
Thank you again for the opportunity to meet with you today. I'll be happy to respond to members’ questions on these or any other topics. I will hand over to Jeremy to finish off our five minutes.
Thank you.