Final answer:
Canada's official international reserve assets are held in the foreign exchange market to maintain a fixed exchange rate.
Step-by-step explanation:
The bulk of Canada's official international reserve assets are held in the foreign exchange market. Reserves help to keep currencies at a fixed exchange rate. For example, when a country runs a deficit in the balance of payment and there is a shortage of money, the supply of its currency in the foreign exchange market exceeds the demand. To maintain the proposed fixed exchange rate, a country's central bank or monetary authority needs to hold reserves of other highly liquid assets, such as foreign currencies or gold.