What Happens in a Failure

Resolution of large banks

CDIC’s approach to resolution

Resolution occurs at the time when authorities determine that no supervisory or private sector solution alone can restore the member institution to viability. As Canada’s resolution authority, CDIC is responsible for ensuring that effective measures are in place to deal with such events.

To ensure we are prepared for bank failures, CDIC plans for the resolution of all its member institutions by:

  • Monitoring risks and emerging issues that could affect member institutions and CDIC.
  • Developing plans and processes to ensure eligible deposits are protected in the event of a failure at financial institutions of any size.
  • Requiring member institutions to maintain data standards that would facilitate timely insurance calculation and reimbursement of deposits in the event of failure.
  • Coordinating with domestic and foreign counterparts on ways to resolve the largest banks which operate internationally.
  • Developing new policies to improve Canada’s resolution regime.

In the case of Canada’s largest banks – the D-SIBs – they must prepare resolution plans, which describe how they could be resolved in an orderly manner, while ensuring the continuity of critical financial services. CDIC’s role is to ensure these plans are realistic and meet the objectives of resolution. CDIC must also be ready and capable to implement the plan.

CDIC meets regularly with D-SIBs and provides guidance (PDF, 107 KB ) to ensure these plans are credible. Canadian and foreign regulators as well as other stakeholders also share information and perspectives on the resolution of Canada’s D-SIBs.

Back to top