Bank of Canada governor warns of dangerous global imbalances
Tiff Macklem says China's overproduction and outsized U.S. investment flows are creating risks. AI and crypto are making them harder to track.
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The governor of the Bank of Canada warned Tuesday about persistent imbalances between major economic powers that threaten global stability, in a rare speech to a business audience in Paris.
Tiff Macklem said trade and fiscal imbalances between countries aren't inherently problematic and can be part of normal global financial functioning. But when imbalances become too one-sided for too long, they spill over with consequences for inflation, stock prices, and relationships between nations.
Macklem specifically cited overproduction from countries like China and outsized investment flows into the United States as examples of imbalances that have grown too extreme. He also flagged that innovations like artificial intelligence and cryptocurrencies are exacerbating some imbalances and making them harder to track and regulate.
While protectionism might offer short-term relief to countries struggling with these imbalances, Macklem urged financial leaders to lean instead into open trade and stronger cross-border cooperation to build a more resilient global system.
