Briefly:

Bill S-217 would amend the Financial Administration Act and the Bank of Canada Act. Jenkins said that he supports the goals of increasing fiscal accountability in the public sector but questions its practical implementation for his particular institution.

“I can assure you that the Bank of Canada takes these issues very seriously,” Jenkins said. “The issue before us today is whether the amendments to the Bank of Canada Act contained in Bill S-217 will add value in terms of the proposed additional financial reporting. We certainly can provide that additional information, but, in our view, it is not evident that providing that information would satisfy a cost-benefit analysis.”

Jenkins said the bank already lives up to the transparency commitment by publishing a monthly balance sheet and that the bank’s inflation target of 2% dictates the vast majority of its policy.

“The Bank of Canada is not a commercial enterprise. Our balance sheet is structured to enable us to carry out two main responsibilities: the conduct of monetary policy and activities related to our role as lender of last resort,” he said. “Canadian taxpayers need to feel confident that public monies are being managed prudently. What is not self-evident in the case of the Bank of Canada, given our mandate, is whether the benefits of providing the additional information outweigh the costs.”

Consumers cautious about mortgage debt

(February 20, 2007) Three-quarters of all respondents to the 2006 Mortgage Consumer Survey conducted by Canada Mortgage and Housing Corporation indicated that their goal is to pay off their mortgage as quickly as possible.

In fact, CMHC found that half of the respondents agreed that they would use extra money, whenever available, to pay down their mortgage.

“This study suggests that Canadians are fundamentally cautious when it comes to their mortgage debt,” said Pierre Serré, vice-president, insurance product and business development. “This is particularly true among young first-time homebuyers.”

This urgent desire to pay off mortgage debt has not, however, fuelled a distrust of Canadian lenders. Quite the opposite is true: When asked about their preference of mortgage provider, 86% of respondents indicated that it is somewhat or very important that their lender be a Canadian institution.

Although 2006 did see an increase in the percentage of consumers who switch providers when renewing their mortgage, the majority of consumers remain loyal to their current lender.

Seventy-one per cent of Canadians who refinanced their mortgage last year did so before the scheduled renewal time. Among those who refinanced, the most common reason was for home renovations and improvements, followed by reducing their overall interest costs.

North America boosts global investor confidence

(February 20, 2007) State Street Global Markets, the investment research arm of State Street Corporation, released on Tuesday the results of the State Street Investor Confidence Index for February 2007, which measures the confidence of institutional investors.

Buoyed particularly by North American results, the news was mostly positive. Globally, investor confidence increased to 90.4, up 5.2 points from January’s reading of 85.2. North America saw a substantial rise in confidence of institutional investors with a jump from 94.9 to 101.7.

The North American rise was a sharp contrast against that of other regions, where confidence remained relatively unchanged. European investors’ confidence showed a small increase of 1.5 points to 93.7, and Asian investors’ actually dropped 1.1 points to 83.9.

“This month saw a strong increase in the confidence of North American investors,” said Harvard professor Ken Froot, who oversees the study. “In part, this is reflective of the global growth outlook, with a sanguine assessment by U.S. policymakers complementing improved numbers in both Asia and Europe.”

The study’s other director, State Street’s Paul O’Connell, said that U.S. investors bought a record amount of foreign securities over the past 12 months.

He added, “This is reflected in the 18-point increase we have measured in North American confidence over the period. European confidence remains close to the high established in December, but in Asia, investors have become considerably more cautious over the last three months.”

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(02/20/07)

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.