Macklem: Need for vaccines in developing nations

OTTAWA - The governor of the Bank of Canada is pressing the case for COVID-19 vaccines to be sent to developing nations.

Tiff Macklem says the pandemic is not just the biggest health risk facing the world, but also the largest economic risk.

In a speech today, he says governments and the private sector must work together to make vaccines available to all.

He says the global financial system needs to chart a path out of the pandemic that balances short-term needs with long-term goals.

Macklem warns that policy-makers putting too much focus on managing immediate volatility in their economies could thwart long-run changes fundamental to boosting productivity and standards of living.

WATCH: At 1:30 (ET) Governor Tiff Macklem takes questions from the media following his speech to @CFR_org. #cdnecon https://t.co/3cqhf2Uwuk

— Bank of Canada (@bankofcanada) October 7, 2021

Speaking to the American-based Council on Foreign Relations, Macklem says finding that balance is even more crucial now as central banks prepare to wind down stimulus programs and likely put the global financial system under more pressure.

"We need a clear long-run destination that everyone is committed to and a framework to manage short-run challenges in a way that doesn’t derail us from that ultimate destination," Macklem says in the text of his speech.

"What we need is an international monetary and financial system that can handle — even facilitate — the transitions to come, including the exit from exceptional monetary policy, the transition to net-zero emissions and the potential digitalization of the international monetary system."

The Bank of Canada has already started to unwind one of its key stimulus programs launched at the start of the pandemic by rolling back its weekly purchases of federal bonds. The program, known as quantitative easing, is designed to encourage low interest rates on things like mortgages and business loans, but could soon move to a phase where it no longer adds stimulus, but only maintains what is there.

Similarly, the central bank's key policy rate has stayed at 0.25 per cent since the start of the pandemic, which is as low as the bank says it will go, and where it should stay until the second half of next year when the Bank of Canada expects the economy to have healed enough to handle higher interest rates.