MNI 5 THINGS: BOC: Must Watch For Risky New Fin Market Deals>

By Courtney Tower

     OTTAWA (MNI) - Bank of Canada Senior Deputy Governor Carolyn 

Wilkins made the following points Thursday in a speech at the University 

of Toronto's Rotman School of Management, Toronto, Ontario: 

     - Wilkins called for "a sharpened focus on consumer and investor 

protection" by central banks and government regulators because of risks 

created by new financial instruments in the markets including some 

exchange traded products (ETFs) and by crypto money instruments that are 

"moving fast and (are) largely unchecked." 

     - To sharpen that focus, Wilkins suggested that the effects of 

central bank and macroprudential policies must be more closely 

understood. She went further: "We should continue to strengthen the 

framework in which monetary policy and macroprudential policies 

reinforce each other." 

     - Wilkins particularly mentioned ETF products that "offer investors 

relatively easy access to illiquid, complex strategies." Some "rely on 

derivative structures that have counterparty and collateral risks," and 

they hearken back to the kind of instruments that led up to the 

financial crisis a decade ago, she said. 

     - Another concern, small now but on the horizon as a large concern, 

was crypto money. A strategy of covering risks in both cash and 

derivatives products was needed domestically and internationally. Also 

mentioned was cyber risks, which BOC Governor Stephen Poloz has often 

cited as something "that keeps me awake at night." 

     - On monetary policy, Wilkins reiterated the need to avoid moving 

either too slowly or too quickly. She said trade-related uncertainty 

continues to "cloud the global and Canadian outlooks." She added that 

given high household debt and the economy operating close to capacity, 

"monetary policy actions to achieve the inflation target and support 

financial stability are currently complementary." 

                         ** MNI OTTAWA ** 

--MNI Ottawa Bureau; yali.ndiaye@marketnews.com

[TOPICS: M$B$$$,M$C$S$]