Book Description

FFTW will also make recommendations regarding both the investment structure of the EFA and the practices surrounding the management of the EFA given our understanding of the need to limit risk within the reserve assets in an appropriate way for a country of Canada's standing in terms of the size of foreign exchange reserves and the likely role of, and use of, these reserves. [...] SCOPE OF THE PROJECT The project covers all aspects of the management of the asset side of the balance sheet and the EFA will be assessed in a portfolio context, as a portfolio of assets. [...] Within this evaluation, FFTW has taken into consideration the unique relationship between the Bank of Canada and the Department of Finance to the extent that it is relevant to the management of the assets in the EFA. [...] Given that most, but not all, countries separate the management of the assets and the management of the liabilities, the ALM approach adopted by the Bank of Canada and the Department of Finance lends itself to a combined approach, overseen and managed jointly by the two entities. [...] While the liabilities are not part of the evaluation, it should be noted that changes to the liability structure or to the method of hedging liabilities will likely impact the asset side of the balance sheet and hence the management of the EFA.