a fixed amount at the target rate, to a competitive and discriminatory price auction at market rates. we will also increase both the aggregate amount of each spra and sra operation and the limit for each counterparty. these changes will allow firms that need liquidity to bid for a higher amount in any given round. we expect that this will help distribute liquidity more efficiently to those that need it most. at the same time, we may accept larger deviations from the target rate before we step in. doing so will give the market more room to manoeuvre and clear itself without our intervention. these are the main proposed changes to our operations to reinforce the target for the overnight rate. now, i ’ m going to turn to the enhancements we are proposing to support well - functioning markets. an important part of how we participate in markets is through the management of our balance sheet. let me give you some details on that. the bank ’ s balance sheet like any company, central banks have balance sheets that need to be managed. at the bank of canada, our largest liabilities are bank notes in circulation and deposits from the federal government, which are mainly backed by the assets in our investment portfolio. almost all of the $ 94 - billion in assets held on our balance sheet consist of government of canada bonds and treasury bills. these are acquired on a regular basis through primary - market purchases on a non - competitive basis. 7 we follow three principles in acquiring these assets : prudence, transparency and neutrality. prudence is exercised primarily by selecting assets that have a low credit risk. we achieve transparency by communicating our balance - sheet activities to the public. and to attain neutrality, we act as broadly and neutrally as possible to limit market distortions from our investment activities. at present, the composition of the bank ’ s portfolio broadly reflects the composition of the federal government ’ s domestic debt. going forward, we expect that the volume of bank notes in circulation will continue to grow roughly in line with the growth of nominal gdp. this will increase the bank ’ s asset requirements. at the same time, the market demand for government of canada securities is also increasing. for example, the proportion of the federal government ’ s debt held by nonresidents has increased steadily. it has risen from almost 15 per cent in 2006 to just over the results of the bank ’ s purchases, including the value of securities purchased and the price. bis central bankers ’ speeches 25 per cent in

range of counterparties, against a broad set of securities, at a fixed price. the specific parameters would be confirmed upon activation. we expect that if the ctrf were activated, the counterparties eligible would be primary dealers and their affiliates. however, the number of counterparties could be extended to include other institutions – subject to certain criteria – should the bank consider it necessary for the stability of the financial system. conclusion let me wrap up by reiterating that the bank ’ s operating framework is working well. we monitor our market operations closely to ensure that they are contributing to the maintenance and diversity of the financial ecosystem. bearing in mind that a healthy system will feed economic growth, we have identified important areas for improvement. we think carefully about making changes to our framework because we recognize that doing so will affect markets. we want to make sure that any changes we propose are well thought out and include feedback gathered from market participants like you. the adjustments i have outlined are in response to the changes we are witnessing in financial markets. in addition to helping us achieve our framework objectives, they will benefit all market participants. i would like to thank meyer aaron, stephane lavoie and mark de guzman for their help in preparing this speech. bis central bankers ’ speeches