s financial institutions have ample buffers of capital and liquidity and the system remains resilient. financial institutions are expected to take responsibility for managing their own foreign currency exposures. they implement hedging and funding strategies to that end. indeed, so do other major canadian foreign - currency borrowers, such as provincial governments. in the unlikely event that a canadian financial institution had exceptional needs for liquidity in us dollars or other foreign currencies, the swap lines the bank of canada has established with other g7 central banks would enable us to obtain funds in any of four other currencies. these lines were introduced in response to the global financial crisis. they were renewed in response to market stresses in europe and later turned into standing agreements. the bank of canada has never drawn on these swap lines, nor has it faced a request to provide canadian dollars. but these arrangements are available if needed. even though it is very unlikely that canada ’ s foreign exchange reserves would need to be drawn 3 / 6 bis central bankers'speeches down for financial stability purposes, their existence provides further reassurance of the safety and soundness of the canadian financial system. such confidence, in turn, helps maintain stability in times of financial stress. all this considered, canada holds foreign exchange reserves as a precaution against extreme events. even though canada has had no history of such events, we know from international experience that they are possible. so far, i ’ ve emphasized the role of canada ’ s reserves in serving canadian purposes. i should also mention the use of our reserves in our role as a good global citizen. part of our official international reserves — around us $ 10 billion — are held at the imf. canada, like a number of other advanced economies, also makes a portion of its reserves available for imf programs. taking all these potential needs into consideration, canada ’ s level of liquid international reserves is set at a minimum of 3 per cent of nominal gdp — a floor which it generally significantly exceeds. this level is simple to communicate to the public, credit rating agencies and investors. while, as i ’ ve noted, it is low relative to many countries, it is in line with a set of similar countries such as the united kingdom and australia. together with our department of finance, we review this level periodically in light of various metrics and international comparisons — and particularly with regard to extreme scenarios that would imply a draw on reserves. the last such review, completed in 2016, concluded

. by and large, the exchange rate movements delivered by the market have served canada well. trying to hold the dollar constant would have given us larger fluctuations in unemployment, output and inflation. nonetheless, for many years we did have a policy of routinely using our foreign reserves to resist, in an automatic fashion, any significant upward or downward pressure on the dollar. for example, between 1995 and 1998, we intervened roughly 150 times. we weren ’ t targeting a particular level for the exchange rate but simply smoothing its movements. this reflected a belief at the time that markets did not function efficiently and could give rise to volatility that could be destabilizing. but this view gradually gave way to the weight of evidence and experience. by 1998, we had concluded that such interventions weren ’ t particularly effective. we saw the futility of attempting to moderate exchange rate movements caused by changes in the underlying fundamental factors. trying to counter them was a bit like tapping on the brakes while skidding on ice. it can help, momentarily, but not by much. so where does that leave us? we do have a policy framework that would allow us to intervene in the unlikely event that it ’ s needed. that could happen under two scenarios. the first would be a market breakdown with extreme price volatility. buyers or sellers would be increasingly unwilling to transact, indicating a severe lack of liquidity in the canadian - dollar market. the second would be sharp currency movements that seriously threaten the conditions that support sustainable, long - term economic growth. in a market breakdown, intervention would aim to restore market functioning and would likely be quite short - lived. in extreme currency movements, it ’ s understood that intervention would be part of a broader set of policy changes to re - establish confidence in canadian economy. this framework is transparent — it is posted on our website. thus, we are ready to intervene, if necessary. but as i said, we have not seen the need to do so at any time throughout the past two — often turbulent — decades. there have, however, been a couple of occasions over that period when canada participated in concerted intervention along with other countries. in 2011, canada joined an action to stem excess volatility and disorderly movements in the exchange rate of the japanese yen following 2 / 6 bis central bankers'speeches the earthquake and resulting tsunami and nuclear crisis at the fukushima nuclear plant. the intervention involved selling the yen against our respective domestic currencies to send a clear