UPDATE 6-HIGHLIGHTS-Bank of Canada's Carney speaks in Toronto
Aug 22 (Reuters) - Below are quotes from an appearance by Bank of Canada Governor Mark Carney in Toronto:
ON STRENGTH OF CANADIAN DOLLAR:
"We take the currency into account in setting the monetary policy. It is a very important relative price, it is one of the headwinds. We have signaled consistently about the persistent strength of the Canadian dollar and the challenges that brings to our economy. It has consequences for the stance of policy in this country. But ... the dollar is not the sole answer to our challenges on the export side. The structural orientation of our economy, unfortunately is too much north-south, not enough east-west in a global sense. And that's going to take a while to change and there's no sense pretending that's not the case."
ON POSSIBLE RATE INCREASES:
"There are a few factors here: one is the relatively modest level of the output gap. Secondly the evolution of the Canadian housing market - we're starting from a position of near-record activity, certainly as a proportion of GDP.
"The last thing is that rates are very, very low. They are lower here than they are in any other non-crisis economy and so stimulus is considerable."
ON PROGRESS ON EUROPEAN DEBT CRISIS:
"The actions of the ECB are important, very important. There has been continued progress on some of the reforms in the major economies in Europe. There are other challenges in some of the peripheral economies that have become a little more acute in recent weeks as well. But the situation is, as we say, contained but remains acute, and I would always distinguish in Europe between measures which create a time period for the underlying adjustments to take place, and the underlying adjustments.
"And we very much welcome important measures, including signals from the ECB's governing council a few weeks ago, those are very important."
ON POTENTIAL SHIFT IN VALUE OF CANADIAN DOLLAR:
"If there were a shift, a dramatic shift in the currency, one would not expect us to achieve as much as some might think."
ON RECENT ECONOMIC DATA
"The recent data has been soft. ... There's still some slack in the labor market."
"This is a message to Canadians: this is not a normal recovery and expansion, it's not a normal cycle. We've got fundamental challenges ... we have to face. This is going to be a long slog."
ON COMPANIES PUTTING CASH TO WORK:
Shareholders have a role to play here, that if the companies can't determine what to do with a very large cash pile, give it back to the shareholders and they'll figure out what to do with it."
ON BUSINESSES BEING CAUTIOUS:
"The point we make to Canadian business is having the best financial system in the world is only really of value if also there in the tough times. We expect it to be there if there are tough times. And so the level of caution could be viewed as excessive."
ON GLOBAL COORDINATION OF REFERENCE RATES SUCH AS LIBOR:
"In terms of where to next on Libor and similar reference rates, there are a number of national processes that have been set up. ... There will need to be international coordination of these. These are rates that ultimately are important for a huge swath of the global financial system and so we will do our best."
ON TARGETING LEVELS FOR THE CANADIAN DOLLAR
"We don't target, as you know, and it's a matter of some debate, we don't target a specific level for the currency. What is influencing the level of the currency are terms of trade. That is heavily influenced by the level of commodity prices, which have been well above historic averages for a long time and we think that's something that's going to continue for some time because of the growth in emerging markets."
ON CANADA AS A SAFE HAVEN, PORTFOLIO FLOWS:
"In a very volatile world, very uncertain world, Canada is a viewed as a so-called safe haven. So we have flows into this country, not just a foreign direct investment -- takeovers, but portfolio flows. Capital is looking to come into Canada because of our strengths. And our challenge for those two elements is how to use them to our greatest advantage."