Finance committee  First, I have to be careful with that question because it is not within our mandate to offer the government official advice on the budget. Second, the budgetary measures that Canada and the United States have taken are one of the factors in the Canadian recovery. Those measures will have increasing impact on our economy by the end of the year, especially in 2010 and especially in the United States.

Finance committee  The issue, if I may, with the effective lower bound is that there are a variety of shorter-term money markets or financial markets, and it would be very difficult for them to function at that level, because there are transaction costs associated with operating those markets, and the actual net return from those transactions....

Finance committee  Europe has.... It depends on your definition. I think, strictly, in terms of the definition of the European Central Bank, that it has not yet pursued that.

Finance committee  Yes, the central banks that are pursuing both quantitative and credit easing at present are the Federal Reserve, the Bank of England, the Swiss National Bank, and the Bank of Japan. They are all pursuing both strategies at the current time.

Finance committee  There are two issues here. One is that if you look at the government curve, the government bond curve, the bank would have to make a decision about what maturity on that curve would have the biggest implication for overall financial conditions and activity in the economy. As we've adjusted the overnight rate, and as we've put a conditional commitment on that overnight rate now, we've affected that curve.

Finance committee  We have to do something with the liabilities. You have to do both. It's not either/or. Both of them happen at the same time. You create a liability. The question is what you do with the assets. Do you do it on a very short-term basis, or do you...?

Finance committee  It's an extremely important question. The first point is to re-emphasize that we'll only use it if we have to use it. The second point is that the important step is the purchase of the assets and the implications of those purchases on overall financial conditions, whether it's government bonds or some other securities, to improve, ultimately, the cost of credit and the availability of credit to businesses and households in the country.

Finance committee  No, and we also wouldn't buy.... I should have corrected that. There was a question earlier with reference to equities. That would not be the intent. Part and parcel of that, though, as you say, is the creation of new central bank money. So the first channel is to purchase the securities, improve overall financial conditions, improve activity output, and reach the inflation target.

Finance committee  The easiest shorthand for the real world examples is to look at the risks to our projection. These include a deeper global recession than envisioned, so that the famous second derivative is not as positive as we'd like and the bottoming out—to some extent the slowing of the decline—that is expected in the second quarter and into the third quarter and then up does not materialize.

Finance committee  In which circumstances? I think the important thing is that we get some sort of shock that pushes the outlook for inflation down in a persistent fashion so that we need to provide additional stimulus. At that point, the bank would need to make a judgment about which of these—and within these strategies there are various ways to put them into effect—would have the biggest impact on overall financial conditions.

Finance committee  You sucked me in.

Finance committee  Thank you, Mr. Menzies. There are a couple of things. One is that, just to be absolutely clear, the $4.1 trillion is the estimate of the IMF—we're not necessarily endorsing it. But I'd make two comments, and I'm not trying to be cute. Part of the reason they're called “toxic” assets is that their presence affects or poisons existing management of the institutions that hold them.

Finance committee  Thank you for the question. We do two things with commodities. We differentiate between energy commodities and non-energy commodities. For energy commodities, our forecast is the futures curve for natural gas and oil. You're absolutely right that natural gas is far more important to Canadian growth and activity in Alberta, at least at the current time, than the price of oil.

Finance committee  Ah, the less ambitious. There are two aspects to that. Global fiscal policy moved less rapidly and was less ambitious than the 2% target of the G-20. We will now probably get there in other countries--at least there's an announced intent. But implementation is important, and it's getting pushed out into 2010, as opposed to earlier.

Finance committee  One of the issues that we've advocated--and it was adopted, again in that same communiqué of G-20 leaders--is that regulators have a responsibility as well for the financial system's stability. Therefore, in their actions they must take into account the implications of their actions or regulations for the system as a whole.