A final area to mention in briefly rounding up the pre-crisis environment is the growth of the wealth management sector. Funds under management (principally in superannuation and life offices) expanded from around 30 to around 130 per cent of GDP between 1985 and 2007, broadly matching the growth rate seen in the deposit and loan sector.
While on a yearly basis this may not sound like much, cumulatively the differential was rather significant and can explain most of the trend depreciation in the Canada-U.S. exchange rate over this period. As for the cyclical swings that accompanied the trend depreciation of the Canadian dollar, they reflected a number of factors.