CDIC IS CANADA’S RESOLUTION AUTHORITY
The Canada Deposit Insurance Corporation (CDIC) is the federal
Crown corporation that protects deposits at its member institu-
tions, which include banks, federally regulated credit unions, and
trust and loan companies. Since its creation in 1967, CDIC has
handled 43 failures affecting more than 2 million depositors. No
one has lost a single dollar of deposits under CDIC protection.HOW DEPOSIT INSURANCE WORKS
CDIC insures eligible deposits that are held in Canadian currency
in member institutions. Close to 98% of personal accounts are
eligible for deposit protection under CDIC’s seven separately
insured categories. CDIC protects up to $100,000 in each cat-
egory, per institution. Deposit insurance is free and automatic.
But not everything is covered. Go to cdic.ca for a list of what’s
covered and what isn’t.RESOLUTION TOOLS
In a failure situation, CDIC chooses from a number of resolution
tools based on a variety of factors—including the bank’s size and
complexity, its franchise value, and the availability of a private
buyer. The main concern is to maintain critical services and
continuity of operations that are important for fi nancial stability.
Reimbursement and bail-in are only two of a variety of resolution
tools available to CDIC.REIMBURSEMENT
In certain cases, a failed bank is closed and CDIC launches
its rapid reimbursement process so that you get your money
quickly. Reimbursement would likely only be used for small to
medium-size banks. CDIC reimburses automatically, so you
wouldn’t have to fi le a claim. The bank stops operating, contracts
would be terminated and its critical fi nancial services would no
longer be available, including account access.For eligible deposits in personal accounts, mortgage tax accounts,
RRSPs, RRIFs and TFSAs, CDIC reimburses up to $100,000 per
category. Joint account owners together receive one payment
of up to $100,000 (not $100,000 per person). For trusts, up to
$100,000 is reimbursed per benefi ciary. Eligible deposits within
these categories include GICs (capital and interest combined)
with an original term to maturity of fi ve years or less.A GIC with an original term of more than 5 years is not insured.
US dollar accounts and some investments (e.g., mutual funds,
stocks, bonds) are also not protected by CDIC.BAIL-IN
A bail-in means that CDIC would recapitalize a large Canadian
bank by converting certain long-term debt to common shares. It
would ensure losses are covered by the bank’s shareholders and
investors—not by taxpayers or depositors. The institution would
stay open and operating, and depositors would not be affected.WHAT HAPPENS
IF A FINANCIAL
INSTITUTION
FAILS?
Learn more about the different tools CDIC has to protect your money at cdic.caFinancial institutions in Canada rarely
fail, but it has happened and could
happen again. A stable fi nancial system
is at the foundation of a healthy economy,
and fi nancial services are critical for
your daily life. Here’s our preparation
plan and how your money is protected.