OTTAWA – June 22, 2017 – The Canada Deposit Insurance Corporation (CDIC) today welcomed changes to its mandate, which now formally designates CDIC as the resolution authority for Canada’s largest banks.
The designation recognizes CDIC’s role in handling the failure of its member institutions – in particular Canada’s largest banks – in order to protect depositors, maintain the flow of financial services, protect our economy and minimize risk to taxpayers. The amendments, part of Budget Implementation Act 2017, also require Canada’s largest banks to submit resolution plans to CDIC.
“These changes recognize the important role CDIC plays in promoting and contributing to the stability of the Canadian financial system, and are in step with international standards,” said CDIC President and CEO Michèle Bourque.
“Since its creation 50 years ago, CDIC has evolved to meet the demands of Canada’s changing financial landscape and to better protect depositors and taxpayers.”
For example, following the global financial crisis, CDIC’s powers and tools were expanded. These enable CDIC to stabilize a large bank in financial difficulty and distribute losses to banks’ shareholders and creditors in the event of failure, rather than depositors and taxpayers. The new tools include the power to create a bridge bank, enhancements to our restructuring ability, and the recent introduction of a bail-in regime to recapitalize a failing large bank.
Since it was created in 1967, CDIC has dealt with 43 member failures affecting some 2 million Canadians. No one has lost a dollar of deposits under CDIC protection.
CDIC is a federal Crown corporation that contributes to the stability of the Canadian financial system by providing deposit insurance against the loss of eligible deposits at member institutions in the event of failure. CDIC protects close to $750 billion of savings held by its member institutions which include banks, federally regulated credit unions as well as loan and trust companies and associations governed by the Cooperative Credit Associations Act that take deposits. CDIC is funded by premiums paid by member institutions and does not receive public funds to operate.
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Director, Communications and Public Affairs