Canada’s bail-in regime: adding strength to a robust system

With the coming into force of the bail-in regulations on September 23, 2018, Canada’s bail-in regime is now in place. This is a major milestone for Canada’s resolution regime and provides CDIC with a powerful tool to resolve a domestic systemically important bank (D-SIB) in the unlikely event that it fails or is about to fail.

Stepping up efforts to let Canadians know “We Protect Your Money”

Canada has not experienced a bank failure since 1996—22 years ago. While that is great news, it also means that many people may not think about the consequences for their savings, if their financial institution were to fail. This poses a challenge for CDIC: how to inform Canadians about the automatic CDIC protection that exists for an event they don’t think will happen?

Highlights of Deposit Trends in CDIC’s Membership

As Canada’s deposit insurer and resolution authority for federally-regulated deposit-taking institutions, our ability to deliver on our mandate rests crucially on a sound understanding of key trends and developments in our member institutions’ business environment. One critical aspect of the business environment for CDIC is the manner in which member institutions’ fund their lending activities. As a deposit insurer, we closely monitor and analyze available data and information on our member’s financial risk profiles to better understand our insurance obligations and risk exposures.

CDIC financial highlights

As at June 30th, 2018, CDIC’s most recent published financial results, the Corporation’s ex ante funding stood at $4.5 billion, or 57 basis points of insured deposits compared to its minimum target level of 100 basis points of insured deposits. Currently, CDIC expects to meet its minimum target by March 31, 2025.

Funding: A vital ingredient for CDIC

Adequate funding is critical for the proper functioning of Canada’s deposit insurance system. As Canada’s federal deposit insurer, CDIC has two primary funding mechanisms we would rely on if a member bank were to fail and funds were needed to resolve the failure. The first is an “ex ante fund,” or simply our fund, which is being accumulated over time. The second is the ability to borrow from the Government of Canada.

Promoting confidence through public awareness

CDIC has a three-year public awareness strategy and plan designed to meet two key objectives. First, it aims promote confidence in the Canadian financial system by ensuring depositors are aware of CDIC deposit protection so they can make informed decisions about the safety of their savings. Second, the strategy is designed to reduce the risk of a bank run by assuring Canadians that CDIC protects their hard-earned money.

CDIC: Resolution authority for our members

For 50 years CDIC has protected the hard-earned savings of Canadians. We do this by insuring the eligible deposits of Canadians in some 80 member institutions. Member institutions range from small trust companies and banks, to federal credit unions, to Canada’s largest and most complex banks (Domestic Systemically Important Banks referred to as D-SIBs). CDIC benefits from a wide array of powers to address a failing member institution—from liquidation and reimbursement of insured depositors, to tools to address a failing D-SIB.