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The deputy governor of the Bank of Canada has hinted that the central bank could resort to quantitative easing — essentially printing money — as a means of holding the rising Canadian dollar in check.

In a speech to the Canadian Association for Business Economics today, Deputy Governor Timothy Lane said that the rising loonie could pose a threat to the Canadian economic recovery, choking off exports. Under normal circumstances, the Bank could cut interest rates to hold the dollar back, but there is virtually no room for such a move.

“Even though we are at the effective lower bound for our policy rate, we retain considerable flexibility through the use of unconventional monetary policy instruments, including quantitative easing,” he told the Kingston audience.

Lane went on to say that an upturn in the U.S. economy would boost Canadian GDP as well.

“The composition of economic activity in the United States as it recovers will prove favourable to Canadian exporters — as the sectors hit hardest by the recession, such as housing and automobiles, rebound,” he told the audience in Kingston.

The Bank of Canada is predicting GDP growth of 3.0% in 2010, and 3.5% in 2011, following a contraction of 2.3% for 2009.

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Helping Canadians understand life and health insurance

The Canadian Life and Health Insurance Association (CLHIA) released a revised version of its brochure on disability insurance — its sixth in a series of brochures focused on helping consumers understand life and health insurance products and services.

“The life and health insurance industry is committed to promoting financial literacy in Canada,” said Frank Swedlove, CLHIA’s president. “These plain-language brochures will help Canadian consumers navigate their way through the ever-growing range of products and services offered by life and health insurance companies,” he added.

These brochures cover life insurance, supplementary health insurance, disability insurance, travel health insurance, segregated fund contracts and the coordination of benefits. Click here to download a copy.

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Northern Trust introduces corporate social responsibility post

Northern Trust has named Connie Lindsey as head of the new corporate social responsibility post. She will be responsible for the design and implementation of the firm’s corporate social responsibility goals and strategy.

Lindsey’s duties will include oversight of Northern Trust’s response to environmental matters and social issues within the marketplace, workplace and community.

Northern Trust has received multiple rankings for corporate excellence, including being named one of FORTUNE magazine’s “most admired companies” and one of America’s Best 500 companies.

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Execs expect more fraud, misconduct: KPMG

Amid continuing economic woes, renewed regulatory enforcement and trillions of government dollars being pushed into the U.S. economy, nearly one-third of U.S. corporate executives expect fraud or misconduct to rise in their organizations, according to a survey by the audit, tax and advisory firm KPMG LLP.

Two-thirds of the respondents anticipate that combatting fraud and misconduct might require additional improvements in internal control environments designed to prevent, detect and respond to corporate wrongdoing, the survey found.

As many as 32% of the executives surveyed said they expect fraud or misconduct to rise in one of three categories: financial reporting, asset misappropriation or other illegal or unethical acts. Inadequate controls (66%) and management override of controls (47%) were viewed as the top enablers of fraud and misconduct.

Meanwhile, 71% of the respondents cite the potential loss of public trust as their top concern if fraud or misconduct were revealed in their organizations.

“Despite some very high-profile prosecutions and the pledges of rigorous enforcement by various government watchdogs, one of the country’s most troubled economic periods has created a perfect storm of increased pressures, new opportunities and dangerous rationalizations to allow business fraud and misconduct to occur,” said Richard H. Girgenti, national leader of forensic with KPMG.

“A volatile mix of issues dominates the market as tough economic times have pushed companies to do more with less: cutting payrolls, pushing employees to maintain output and causing workers to feel driven to do ‘whatever it takes’ to achieve earnings goals.

Meanwhile, government enforcement has hit a fever pitch to uncover wrongdoing in the market,” he added.

Girgenti predicts companies that strengthen their corporate controls and compliance programs to confront fraud and misconduct risks would have a better chance of prospering as the market improves.

The executives surveyed noted improvements were needed around communication and training (67%), technology-driven techniques, e.g., auditing and monitoring (65%) and fraud risk assessments (60%).

About 27% of the respondents admitted their organizations do not fully understand how to conduct investigations or at what point the board of directors should be alerted to potential concerns. Thirty-three percent said they lack protocols on how to remedy control breakdowns.

(08/25/09)