The federal government has opened consultations on the federal deposit insurance framework to interested Canadians and stakeholders until September 26.
The framework was launched under the Canada Deposit Insurance Corporation Act. It was developed to protect Canadians’ deposits in case of bank failures. The three core elements of its coverage are the eligible deposits categories, the coverage limit, and eligible deposits’ scope. The framework also cultivates competition in the finance sector for small and medium-sized institutions given that all insured deposits are protected in the same way.
The Department of Finance Canada is leading the government’s review of the deposit insurance framework for federally regulated financial institutions. The department is working with the Canada Deposit Insurance Corporation, which administers the framework, and financial sector agencies on the evaluation.
The consultation is in line with the government’s regular evaluations of the country’s financial safety measures. The framework was last evaluated in 2014, resulting in the extension of its coverage to foreign currencies.
The framework was also amended to include new categories that handled all registered products similarly. Trust deposit account rules were enhanced as well.
The government urged Canadians and stakeholders to read its consultation paper on the framework. Feedback on questions and proposals may be sent via email to [email protected] with the subject line “Deposit Insurance Review.”
The CDIC, a federal Ceown corporation under the finance minister’s purview, offers free and automatic deposit protection for depositors at its member banks or credit unions. The government said that the CDIC had not paid out deposit insurance in nearly three decades.
The corporation consists of 84 members, including banks, federally incorporated trust and loan companies, and federal credit unions. In addition to insuring deposits lost at member institutions, the CDIC is the resolution authority over its members.
The CDIC is financed through premiums paid by member institutions.