David Dodge, governor of the Bank of Canada, spoke to an event hosted by the Center for Financial Stability and the Canadian Embassy in Buenos Aires today, echoing much of what he’s said last week in Brazil.

Dodge cited five areas that should be priorities for Canada in the years ahead: fiscal prudence, the right microeconomic policies, appropriate social policies, a strong and stable financial system, and more open trade. He reiterated that monetary policy “will continue to be focused on keeping inflation low, stable, and predictable, thus giving citizens, businesses, and investors confidence in the future value of their money. To achieve this, we will try to keep supply and demand in balance.”

He noted that, since the Bank of Canada has chosen low domestic inflation as its monetary policy anchor, “we will continue to have a flexible exchange rate.”

Dodge said that the Bank sees significant financial imbalances throughout the global economy today. “The United States is faced with a large fiscal deficit and a high and growing current account deficit, while some Asian countries are accumulating record current account surpluses. Several emerging-market economies, particularly in Asia, are becoming increasingly powerful players on the world stage. This increases the competitive pressure facing Canadian producers,” he noted. “But it also means new, fast-growing sources of demand and new opportunities.”

He repeated his stance that maintaining fiscal balance must remain a priority for Canada in the years ahead, and that the ratio of public debt to GDP will have to decline further, “to give us the flexibility to meet the demands of our aging population”.

He also called on governments to work to develop healthy and efficient financial markets. “Now, and in the future, we will need to remain focused on promoting healthy and efficient markets. This topic is an ongoing priority for research at the Bank of Canada,” he said.

Dodge concluded by noting that the external environment is favourable for making adjustments. “Demand in the global economy is strengthening, and the geopolitical risks have eased,” he said. “We have a better understanding of which policies are the right ones. And we have made important progress in strengthening our economic policy frameworks.”

“The challenges that we will face make it even more important for us to continue to strengthen those frameworks in order to adjust to changing circumstances and to take advantage of potential gains,” he said. “That is not to say that adjusting will be easy. Indeed, the experience of recent decades proves that it can be difficult, at least over the short term. But if we take the leap and seize the opportunities that change will bring, our societies will surely benefit.