Former Bank of Canada Governor Talks Global Volatility in Saskatoon

walterpalladNovember 24, 2022

Former central bank governor Stephen Poloz says businesses and individuals are likely to take more risks as government capacity declines.

Stephen Poloz, former Governor of the Bank of Canada, will give a Cronkite lecture on public law at S University Law School. Photo by Michelle Berg /saskatoon star phoenix

Former Bank of Canada Governor Stephen Poloz predicts a rise in global volatility in his latest book, The Next Age of Uncertainty.

Poloz was in Saskatoon this week to speak at the University of Saskatchewan Law School. He told the Post Media about the economic challenges he sees ahead.

How do you think Saskatchewan will be able to cope with the upcoming changes in the global economy?

First of all, the prediction that we are heading towards a more volatile future is irrelevant to how prepared you are for it. Maybe – and I think that’s probably the case in Saskatchewan – but that doesn’t change the fact of macro volatility. A lot of interest rate fluctuations, economic booms and busts, a lot of financial volatility. This is essentially a projection from a framework that looks at the long-term forces at work in the economy.

But ask yourself. What can we do to prepare? Now, you want to invest in resilience. And some of the stressors that come before us are the ones Saskatchewan is well positioned to contribute to, you know, his three-legged stool of existence. food, water, energy. Saskatchewan has funds of which he starts in two strong locations. Food is an obvious one, and includes not only food production, but also one of his main ingredients, fertilizer production. And the other leg of stool is energy. In the future, I think we will have no choice but to consider increasing our dependence on nuclear energy. Saskatchewan, of course, is well positioned in that regard.

Do you think our political system can provide a solution?

No, I’m not sure about that question.

Similarly, let’s look at a pandemic. The government, not only in Canada, but in general the government has done a really good job of buffering it for the people. You can argue about what, but it’s from those who weren’t in the middle of making it in the fog of war.

I think we’ve done very well around the world, especially in terms of fiscal measures. Hearing that, you might ask, “Why can’t they keep doing it?” The answer is that the demands on governments have increased significantly. First, you have a huge legacy of debt from what we just did. It’s a burden we have to deal with as we move forward. Second, fiscal spending will continue to rise as the aging population constrains public finances. Health care, aged care, and others use the system.

So all of this is combined with divisive or polarized politics, which is a clear trend in the world. I think it comes from the feeling of being left behind.

Therefore, in my book, I argue that it is up to companies and individuals to deal with risks, and not governments, as in the past.

Overall, how optimistic are you about Canada’s ability to survive the next decade?

I’m actually very optimistic about Canada because it has such a strong starting point. And such a diverse and diverse economy, a strong education system and an excellent workforce. So we have all the ingredients to build our own resilience, to invest in it, to prepare for this future, to really work.

But I think what’s probably missing is the ability to provide clarity. It allows companies to invest in long-term investments with confidence and to make decisions and clarity on large-scale investments related to projects. process they must follow. Often we are not very clear about these things, right?

We need to find ways to provide businesses with more certainty. Then I think companies will invest in things that will keep us resilient and strong through this more challenging future.

Questions and answers have been edited and condensed.

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