Upcoming Changes to Published Bank of Canada Foreign Exchange Rates
Background information about changes to the publication of exchange rates taking place between 1 March and 1 May 2017.
What we’re changing and when
- On 1 March 2017, we will make the following changes to our published foreign exchange rates:
- We will begin publishing new foreign exchange (FX) rate data for 26 currencies. A single rate reflecting the daily average exchange rate per currency pair will be published for these currencies each day by 16:30 ET.
- These 26 currencies reflect the vast majority of foreign exchange transactions conducted against the Canadian dollar. Their selection reflects the combination of the top 20 currencies by trading volume (based on the Bank for International Settlements Triennial FX Turnover Survey) and those of Canada’s top 20 trading partners (based on Statistics Canada’s International Merchandise Trade data). The currencies will be reviewed, and adjusted, if required, every three years.
- For more information, see the associated press release or refer to the calculation methodology.
- From 1 March 2017 to 28 April 2017, these new rates will be published alongside all existing FX rate data to allow users time to adjust.
- As of 1 May 2017, the Bank will publish exchange rate data, as described above, for only these 26 currencies.
- It will cease publishing all other existing exchange rates, including daily noon/closing and high/low rates.
- When these changes are implemented on 1 March 2017, the Exchange Rate section of the Bank’s website will be reformatted, which may result in some data being relocated.
Why we’re making changes to our exchange rates
- These changes reinforce that Bank of Canada exchange rates are provided as a public good—for statistical, analytical and informational purposes only, and not as benchmarks for transactional purposes.
- They also reflect the fact that exchange rates are now readily available from numerous alternative sources.
- They are being implemented after wide public consultation and take into account broader international work on the appropriate design of foreign exchange reference rates.
- These changes are consistent with similar changes undertaken by other central banks.
Why we announced the changes more than one year in advance
- Although these changes will not come into effect until 1 March 2017, the Bank has given the public more than one year’s notice to allow ample time for users of these rates to make any adjustments that may be required.
- The Bank is acutely aware that these changes may necessitate adjustments in business processes, IT systems, legal contracts and, in some cases, federal and provincial legislation.
- The Bank conducted a public survey of the use of its reference rates in 2014. Respondents made it clear that a reasonable amount of lead time to prepare for the changes would be required.
- In particular, over 80 per cent of respondents indicated that a lead time of three months or less would be acceptable. By delaying implementation of these changes for one year, the Bank is providing considerably more lead time to enable the smooth implementation of any adjustments that may be required.
Who will be affected by these changes
- Based on a 2014 survey, a broad range of stakeholders currently use these rates, including:
- entities that use the rates for general business purposes;
- entities that use the rates for commercial contracts or as a benchmark for transactions;
- corporations that use the rates for accounting purposes; and
- individuals and entities subject to legal requirements to use these rates, e.g., the Income Tax Act.
- Therefore, the Bank will continue to publish exchange rates but will reduce the number published and their frequency, as well as change the calculation methodology. The Bank is aware that reducing the number of rates it publishes could require changes in business processes, IT systems, legal contracts, and federal and provincial legislation. In some cases, it could also require seeking alternative sources of exchange rate data that are more appropriate for specific business purposes, including as benchmarks for transactions.
- By giving ample advance notice and delaying implementation of these changes for one year, including publishing the two rates concurrently for two months, the Bank has provided considerable lead time to enable the smooth implementation of any adjustments that may be required.
What we’re doing to prepare users for these changes
- In 2014, we conducted a broad public survey to gain a fuller understanding of the impact of these changes.
- We are delaying implementation of the changes for one year and are communicating the changes well in advance to give users ample time to adjust, including seeking out alternative sources for rates.
- We have consulted with several federal government organizations on the changes and have notified the relevant provincial authorities and industry association groups.
- We are providing a two-month window, between 1 March 2017 and 28 April 2017, over which both new and existing foreign exchange rate data will be published concurrently.
- As of 1 May 2017, we will continue to publish exchange rates for 26 currencies, as a public good, for statistical, analytical and informational purposes.
Why we're reducing the number of currencies for which we provide exchange rates
- Findings from our 2014 survey, together with our own data, suggest that many currencies are infrequently accessed.
- We have decided to limit our published rates to those that represent the majority of foreign exchange activity against the Canadian dollar and are readily tradable.
- This is consistent with practices at other major central banks.
Why we're only going to publish one rate per day and why we’re changing our calculation methodology
- The Bank is changing its calculation methodology to reflect the average observable rate throughout the Canadian business day, rather than at a single point in time.
- This reinforces the distinction between exchange rate fixings used as benchmarks for transactional purposes and Bank of Canada exchange rates that are provided as a public good, for statistical, analytical and informational purposes only.
- The changes are being undertaken in the context of broader international official sector work on the design of foreign exchange reference rates, including recommendations from the Financial Stability Board on foreign exchange benchmarks and the Principles for Financial Benchmarks published by the International Organization of Securities Commissions.
Where else to get exchange rates
- Unlike when the Bank began publishing its exchange rates many decades ago, rates are now readily available from numerous alternative sources (multiple trading platforms, various free and fee-based internet sources, and a range of other data vendors).
We will discontinue publishing noon/close and high/low rates
- While the Bank will continue publishing monthly and annual average exchange rates, we will discontinue publishing noon and closing, high and low, and all forward exchange rates and forward points.
We will keep all past data
- The Bank will maintain all past exchange rate data exactly as they are and will not restate or recalculate historical rate data.
We will adjust our exchange rate lookup tools
- The Bank will maintain its various exchange rate lookup tools but will make necessary adjustments to reflect these changes while ensuring the integrity of all historical data. For more information, please refer to the calculation methodology.
Some facts on the number of people who access our exchange rate data
- The Bank’s exchange rate pages receive over one million visitors a month, representing 80 per cent of all www.bankofcanada.ca page views.