Funds management

In 2022, the Bank of Canada’s funds management activities remained more complex than they were before the COVID‑19 pandemic. As the pandemic evolved, a high degree of uncertainty related to government funding requirements persisted.

Government of Canada bonds continued to be issued in greater amounts than they were before the pandemic. As well, the federal government held higher-than-typical cash balances for much of 2022.

As fiscal agent, the Bank carried out the government’s daily funds management activities. This included conducting ongoing debt auctions and resuming Cash Management Bond Buyback operations. The latter program will help the government smooth out its cash flow and reduce the size of upcoming maturities over the coming years.

Throughout 2022, the Bank also continued to maintain its banking and market operations across multiple sites to support its operational resilience.

Sources: Department of Finance Canada, Statistics Canada and Bank of Canada

Funds management is one of the Bank’s five main areas of responsibility. Learn more about the Bank’s core functions.

Providing policy advice about funds management

The Bank provided ongoing advice to the Government of Canada on its funds management and issuance strategy. In particular, the Bank worked with the federal government and financial market experts to successfully issue the Government of Canada’s first green bond. This required developing and publishing a new issuance framework in line with the core components of global Green Bond Principles.

Managing Canada’s international reserves

As the fiscal agent for the Government of Canada, the Bank also helped the federal government raise funds in international markets and manage the Exchange Fund Account.

A three-year, US$3.5 billion global bond was issued in April 2022 to bolster Canada’s foreign exchange reserves and diversify sources of funding. This global bond was well-received by markets. It attracted more than double its allocation, with pricing at a better rate than bonds for peer issuers.

Despite a challenging environment in global markets—characterized by both high volatility and low liquidity—the Exchange Fund Account remained resilient and continued to meet its mandate throughout 2022.1 The Exchange Fund Account was valued at US$103.8 billion at the end of the 2021–22 fiscal year, up from US$83.4 billion in the previous year.

Modernizing the Bank’s auction systems

The Bank completed the modernization of the information technology system it uses for its domestic operations for conducting auctions on behalf of the federal government. These auctions are an important part of the Bank’s work as fiscal agent for the federal government.

The improved auction system offers the following benefits:

  • enhanced information technology processes
  • increased automation
  • reduced operational risk
  • increased operational scalability and flexibility

Auctions of Government of Canada securities (and other operations used to manage the federal government’s debt) are now more efficient than they were before.

Adapting to changing financial markets

As part of the effort to ensure that interest rate benchmarks are robust, global public sector and regulatory authorities continued to work with the private sector to transition from the London Interbank Offered Rate (LIBOR) to risk-free rates.

To prepare for the planned cessation of LIBOR at the end of June 2023, the Bank worked to amend funding of the federal government’s international foreign reserves with financial instruments referencing the risk-free Secured Overnight Financing Rate (SOFR). In addition to renegotiating rate adjustments from LIBOR to SOFR on existing cross-currency swap contracts, all new transactions for funding through cross-currency swaps were based on SOFR.

Phasing out Canada Savings Bonds and repatriating operations

The Bank continued to prepare for the repatriation of the Retail Debt Program. Because the value of outstanding retail debt continues to decline, it is now more financially efficient for the Bank to manage program operations internally.

This change resulted from the federal government’s decision in 2017 to discontinue the Retail Debt Program. Since then, the total outstanding retail debt issued by the Government of Canada has declined from Can$5 billion in 2017 to Can$500 million at the end of 2022.

The repatriation of operations is set to conclude in 2023.

Looking forward

In 2023, the Bank will:

  • continue to draw on lessons learned from the pandemic to inform the advice it provides the federal government on strategic debt and liquidity management
  • implement improvements to technologies and processes to more efficiently manage collateral that supports the Bank’s domestic market operations
  • complete the repatriation of the Retail Debt Program and implement the technology solution that supports the program
  • begin updating its banking system, which is used to manage its clients’ accounts, make and receive payments, and settle financial market infrastructures

More information

Government of Canada: Debt Management Strategy

Canada publishes Green Bond Framework in advance of inaugural issuance

Green Bond Principles

Canada issues inaugural green bond

  1. 1. The Exchange Fund Account represents the largest component of Canada’s official international reserves. It is used to help control and protect the external value of the Canadian dollar and to provide a source of liquidity to the government, if needed.[]

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