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UPDATE 1-Bank of Canada says insights from sources invaluable

(Adds additional comments by Patterson)

CALGARY, Alberta, June 28 (Reuters) - Conversations with market participants and business surveys are invaluable for the Bank of Canada's decision-making, Deputy Governor Lynn Patterson said on Wednesday in a speech that reiterated the hawkish sentiment that rate cuts had done their work.

Repeating Senior Deputy Governor Carolyn Wilkins' recent assessment of the bank's move to cut rates twice in 2015, Patterson said the rate cuts had done their job.

"Two years later, it is our view that these cuts have helped facilitate the economy's adjustment to the oil price shock and that the economic drag from lower prices is largely behind us," Patterson said in prepared remarks to financial analysts in Calgary.

While the central bank relies on its models and incoming data for its forecast, Patterson said regular outreach, business surveys and private meetings with financial players were critically important, particularly during times of transition or when sentiment is playing a bigger role.

"And while we are committed to communicating new information on the outlook and policy only in public settings, the insights we garner in both public and private are invaluable for our policy making," Patterson said.

Referring to the Business Outlook Survey set to be released by the bank on Friday, Patterson said such outreach provides the bank with timely insights that it would not be able to see in the data until months later.

"I can't emphasize enough how critical these real-time perspectives are to our overall understanding of economic developments, particularly during periods of heightened uncertainty," she said.

Patterson said the bank has increased the frequency of its checkups with market participants and is making contact with "a broader set of players" to track the health of the financial system.

She said the bank was working on a new biannual systemic risk survey, to be launched next year, to seek views on key financial system risks and measure overall confidence in the system.

Patterson reiterated that the bank has seen an important increase in the uninsured mortgage space because of significant growth in Canadian house prices in some cities, highlighting the potential need for market participants to develop additional sources of funding.

"To diversify funding sources, one solution would be the development of a private mortgage securitization market," Patterson said.

While poorly constructed securitization markets can have vulnerabilities, properly developed ones can benefit the economy by helping lenders fund assets while broadening available collateral to promote market functioning, she said. (Reporting by Andrea Hopkins and Leah Schnurr)