Canada’s finance minister has asked former central bank governor Stephen Poloz to examine ways to entice its pension funds to invest more in the country.

Poloz will lead a “working group” that will look at what it will take to get Canadian pensions to put more of their capital into domestic opportunities — including housing development, venture capital and infrastructure such as airports, the government said in budget documents Tuesday.

Large public pension managers including the Canada Pension Plan Investment Board have few restrictions on where they can invest. Over time, they’ve made a huge swing into foreign markets, seeking better returns and greater diversification.

That shift has spurred debate within the country. Last month, more than 90 business leaders, including current and former CEOs, signed an open letter to Finance Minister Chrystia Freeland and her provincial counterparts, urging them to alter the rules for pension funds to “encourage them to invest in Canada.” 

Poloz was governor of the Bank of Canada from June 2013 to June 2020, when his seven-year term expired.

Freeland’s budget also takes steps to advance the government’s open banking framework.

Open banking — also called “consumer-driven banking” — allows consumers and businesses to securely transfer their financial data to other service providers. In theory, that should increase competition in the financial services sector, but the government has been slow to bring in the necessary legislation — it says it’s coming soon.

Freeland’s budget appoints the Financial Consumer Agency of Canada to take charge of overseeing the open banking rules. The government is also setting aside $4.1 million (US$3 million) for the Finance Department to finish the policy work on it.

Canada’s large incumbent banks have been preparing for open banking for years, but they’re not expecting an immediate threat to their business.

The Canadian Bankers Association said in a statement it supports a “consumer-centric approach to using innovative technologies” for the benefit of consumers. The lobby group said it will work with government, regulators and other partners to help come up with the final framework for open banking. 

Andrew Moor, chief executive officer of EQB Inc., which owns Canada’s seventh-largest lender Equitable Bank, has long called for open banking reforms to spur more competition in the financial sector, which is almost totally dominated by the large incumbents.   

“While we await more details with interest, we would have liked to see a formal launch date for the open banking framework and a higher level of investment to better ensure success for Canadians in all walks of life,” Moor said by email on Tuesday.

Aris Bogdaneris, who runs Bank of Nova Scotia’s Canadian banking division, recalled working as a senior executive at ING in the Netherlands when open banking was introduced in Europe.

“It didn’t really impact the banks at all, much to the regulators’ chagrin,” Bogdaneris said during Scotiabank’s investor day in December. “They wanted to have more competition and it didn’t really materialize.”