The Canada Deposit Insurance Corporation (CDIC; french: Société d'assurance-dépôts du Canada) is a Canadian federal

Crown Corporation A state-owned enterprise (SOE) is a government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn profit for the governmen ...

created by Parliament in 1967 to provide

deposit insurance Deposit insurance or deposit protection is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance systems are one component of ...

to depositors in Canadian commercial banks and savings institutions. CDIC insures Canadians' deposits held at Canadian banks (and other member institutions) up to C$100,000 in case of a

bank failure A bank failure occurs when a bank is unable to meet its obligations to its depositors or other creditors because it has become insolvent or too illiquid to meet its liabilities. A bank usually fails economically when the market value of its assets ...

. CDIC automatically insures many types of savings against the failure of a financial institution. However, the bank must be a CDIC member and not all savings are insured. CDIC is also Canada's resolution authority for banks, federally regulated credit unions, trust and loan companies as well as associations governed by the ''Cooperative Credit Associations Act'' that take deposits.

History

The Canada Deposit Insurance Corporation was created 4 March 1967 (under Schedule III, Part 1 of the ''

Financial Administration Act Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fin ...

'' and ''Canada Deposit Insurance Corporation Act''). It is similar to the

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cred ...

in the United States. Since 1967, 43 financial institutions have failed in Canada and all 43 were members of CDIC. There have been no failures since 1996. At 31 December 2017, member institutions numbered 82, according to CDIC's Summary of the Corporate Plan, 2018/19 to 2022/2023. The roots of the CDIC can be traced back to the 19th century, such as the Upper Canada's financial problems of 1866, the North American panic of 1873 and the 1923 failure of Toronto's Home Bank, symbolized today by Casa Loma. Historically in Canada regional risk has always been spread nationally within each large bank, unlike the uneven geography of US unit banking, layered with savings & loans of regional or national size, who in turn disperse their risk through investors. The Canadian banking system is regulated in part by the Office of the Superintendent of Financial Institutions who can, in an extreme case, close a financial institution. Alongside Canada's mortgage rules, the risk of bank failures similar to the US are slim, but not impossible. The original amount of insurance per eligible deposit account was $20,000. This was raised to $60,000 in 1983. As of 2005, CDIC covers $100,000 in eligible deposits per insured category at each CDIC member institution in the event of a failure. On 22 June 2017, CDIC was formally designated as the resolution authority for Canada's largest banks, a recognition of CDIC's role in handling the failure of its member institutions. CDIC has a number of tools to assist or resolve a failing member institution.

Coverage

Insurance is restricted to CDIC member institutions, and covers $100,000 in certain types of deposits, such as savings accounts and chequing accounts, guaranteed investment certificates (GICs) and other term deposits with an original term to maturity of five years or less, money orders, travellers' cheques and bank drafts issued by CDIC members and cheques certified by CDIC members, and debentures issued by loan companies that are CDIC members. Eligible deposits are insured separately in each of seven categories: * in one name * in more than one name * in an RRSP * in an RRIF * in a TFSA * in trust * for paying taxes on mortgaged properties A key characteristic of CDIC deposit protection is separate coverage. Given that each deposit category is protected separately, depositors can benefit from protection far in excess of $100,000 (e.g. they are protected for $100,000 in each of seven categories). Most

credit union A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit organization, nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including depo ...

s (and ''caisses populaires'' in Quebec or New Brunswick) are not insured federally, because they are created under provincial charters and backed by provincial insurance corporations which generally follow the CDIC model. Federal credit unions, such as the

UNI Financial Cooperation Caisse populaire acadienne ltée, operating as UNI Financial Cooperation (french: UNI Coopération financière), is a Francophone credit union (french: caisse populaire) based in New Brunswick, Canada whose members are primarily Acadians. UNI's ad ...

''caisse'' in New Brunswick, are incorporated under federal charters and are members of CDIC. ATB Financial, a financial institution owned by the Government of Alberta, is insured directly by the Alberta provincial government rather than through a federal or provincial insurance corporation. Funds in foreign banks operating in Canada are not covered. Deposits in foreign currencies, such as

United States dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...

s, are also not insured even if they are held by a registered CDIC financial institution.

Guaranteed Investment Certificate A guaranteed investment certificate (GIC, french: links=no, certificat de placement garanti, CPG) is a Canadian investment that offers a guaranteed rate of return over a fixed period of time, most commonly issued by trust companies or banks. Due t ...

s with a term longer than 5 years are also not insured. Some funds in Registered Retirement Savings Plans or Registered Retirement Income Funds at a bank may not be covered if they are invested in mutual funds or held in specific instruments like debentures issued by government or corporations. The general principle is to cover reasonable deposits and savings, but not deposits deliberately positioned to take risks for gain, such as mutual funds or stocks.

Current financial position

According to CDIC's Quarterly Financial Report at 31 December 2017, CDIC protects $774 billion CAD in insured deposits. CDIC's ''ex ante'' funding level is $4.2 billion, representing 55 basis points of insured deposits.

List of financial collapses since 1967

*Commonwealth Trust Company 1970 *Security Trust Company Limited 1972 *Astra Trust Company 1980 *District Trust Company 1982 *AMIC

Mortgage Investment Corporation Requires updating to reflect the current Income Tax Act and the growth of MICs that trade on the TSX. A mortgage investment corporation or MIC is an investment and lending company designed specifically for mortgage lending (primarily residential ...

1983 *

Crown Trust The Crown Trust Company was an Ontario-based firm that operated in most of Canada prior to its bankruptcy, along with several other trusts, in 1983. The bankruptcies occurred when a major Canadian recession drove down speculative real estate val ...

Company 1983 *Fidelity Trust Company 1983 *Greymac Mortgage Corporation 1983 *Greymac Trust Company 1983 *Seaway Mortgage Corporation 1983 *Seaway Trust Company 1983 *Northguard Mortgage Corporation 1984 *CCB

1985 *

Canadian Commercial Bank The Canadian Commercial Bank (CCB) was a bank based in Edmonton, Alberta, Canada which failed in 1985. It received its parliamentary charter in 1975 and established its head office in Edmonton. The bank was privately owned and operated as a who ...

1985 *Continental Trust Company 1985 *London Loan Limited 1985 *

Northland Bank The Northland Bank was an Alberta-based Canadian bank that failed in 1985. It was incorporated in 1974. It failed and was closed by the Canadian government shortly after the failure, also in 1985, of the Canadian Commercial Bank. The failures ...

1985 *Pioneer Trust Company 1985 *Western Capital Trust Company 1985 *

Bank of British Columbia There have been two British Columbian/Canadian banks with the name Bank of British Columbia. The first bank: 1862–1901 The first was established by Royal Charter in 1862, with its head office in London.Historical Essays on British Columbia'. M ...

1986 *Bank of British Columbia Mortgage Corporation 1986 *Columbia Trust Company 1986 *North West Trust Company 1987 * Principal Savings & Trust Company 1987 *Financial Trust Company 1988 *Settlers Savings and Mortgage Corporation 1990 *

Bank of Credit and Commerce Canada The Bank of Credit and Commerce International (BCCI) was an international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier. The bank was registered in Luxembourg with head offices in Karachi and London. A decade after opening, BCC ...

1991 *Saskatchewan Trust Company 1991 *Standard Loan Company 1991 *Standard Trust Company 1991 *Shoppers Trust Company 1992 *Central Guaranty Mortgage Corporation 1992 *Central Guaranty Trust Company 1992 *First City Trust Company 1992 *First City Mortgage Company 1992 *Dominion Trust Company 1993 *Prenor Trust Company of Canada 1993 *Confederation Trust Company 1994 *Monarch Trust Company 1994 *Income Trust Company 1995 *North American Trust Company 1995 *NAL Mortgage Company 1995 *Security Home Mortgage Corporation 1996

References

External links

*
Canada Deposit Insurance Corporation Act (R.S.C., 1985, c. C-3)
{{authority control Canadian companies established in 1967 Banks established in 1967 1967 establishments in Ontario Banks of Canada Deposit Insurance Corporation Companies based in Ottawa Financial regulatory authorities of Canada Federal departments and agencies of Canada Deposit insurance