Better management of Canada’s foreign reserves could generate billions in additional revenue while maintaining full liquidity and security requirements.
KEY TAKEAWAYS
Canada’s $130 billion Exchange Fund Account underperformed simple passive benchmarks by $6+ billion USD (2022-2025), representing a significant opportunity cost in a higher interest rate environment.
Outsourcing EFA management to private sector asset managers through competitive mandates could improve returns, reduce Bank of Canada staffing costs, and maintain full liquidity requirements for emergency market operations.
This reform exemplifies the government’s “spend less, invest more” agenda by capturing billions in foregone returns without new taxes, program cuts, or compromising the EFA’s core mission as a liquidity backstop.
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