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Ottawa expands deposit protection for savers
April 5, 2019
6:27 am
Brimleychen
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April 5, 2019
6:30 am
Brimleychen
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Very disappointed. They still don’t want to increase the coverage from 100K.

April 5, 2019
6:34 am
Loonie
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Unfortunately there is nothing here for the average person with savings accounts and ordinary GICs.
Disappointing.

April 5, 2019
7:00 am
Bruford
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Foreign currency coverage is welcome.

April 5, 2019
7:07 am
Loonie
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Bruford said
Foreign currency coverage is welcome.  

Nice in theory, but it will just encourage the well-heeled who want more coverage to abandon the Cdn dollar in favour of the US. And that won't be good for us or our interest rates in the long run.
It would have been much better if they'd extended the 100K limit, which has by no means kept pace with inflation.

I suppose that when the US implodes, if people see it coming, this might allow them to save their necks by investing in yet another currency, but what would that be?
I used to think that was a long way off or might not happen, but have changed my mind in recent months.
I'm not sure what currencies our banks offer in terms of accounts but don't imagine there are very many. Euros, I suppose.
I once had to buy South African rands (cash was required) but no bank or other outlet in Toronto had them for sale - not that I am suggesting anyone invest in them. I didn't need a large amount, maye $20, but no dice; it was only a few years ago.

Maybe need another thread to see what people suggest as an alternative currency to invest in. Or maybe the whole world will go down with the USD.It's very hard to know what this will look like, but it won't be pretty.

April 5, 2019
8:05 am
Bill
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Tiny % of "average" Canadians affected by or care about $100k CDIC limit. And you can get a $US account pretty much anywhere so now we can stuff $100k in there too, that's good! I'm not losing sleep about US imploding - if it does, much of the world does and then, as always, everybody throws their money into $US vs their own currencies and up it goes again. As long as USA has military might, it stays a refuge - unless I'm wrong!

April 5, 2019
8:32 am
hotmony
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Im for the loonie but if we're going to continue on the path toward socialism then im for integration to the greenback.

April 5, 2019
8:39 am
canadian.100
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Bill said
Tiny % of "average" Canadians affected by or care about $100k CDIC limit. And you can get a $US account pretty much anywhere so now we can stuff $100k in there too, that's good! I'm not losing sleep about US imploding - if it does, much of the world does and then, as always, everybody throws their money into $US vs their own currencies and up it goes again. As long as USA has military might, it stays a refuge - unless I'm wrong!  

It is very easy to get bank accounts in USD or Euros in Canada - particularly from the big 6.
Bill is correct - the $100K CDIC limit is really only important if people are dealing with the small, local, or not well known banks/financial institutions. The $100K is certainly no issue if you deal with the big 6. Many are quite comfortable investing in big 6 bank common shares - which have no "guarantee" at all.

PS Highly unlikely the US will "implode". Economic cycles are part of life - expansions and contractions - as Cher said "the beat goes on".

April 5, 2019
9:07 am
Bruford
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Loonie said

Nice in theory, but it will just encourage the well-heeled who want more coverage to abandon the Cdn dollar in favour of the US. And that won't be good for us or our interest rates in the long run.

  

Not abandoning, just diversifying and supplementing coverage. One would have to be a fool to purchase $US at the current exchange rates.

April 5, 2019
11:28 am
hotmony
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Bruford said

One would have to be a fool to purchase $US at the current exchange rates.  

depends the "takedown the system" radical left while weakened is still active

April 5, 2019
12:37 pm
Vatox
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RDSP coverage! I like that!sf-laughsf-cool

April 5, 2019
12:57 pm
Vatox
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Is the foreign money deposits considered a separate category of 100k or is it just agglomerated with savings?

April 5, 2019
1:49 pm
Doug
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The whole deposit insurance scheme is quite the racket, to be quite honest. I don't put much stock in it except for the small, indie banks and trust companies. Even at $100,000, if a major institution failed and there were numerous media reports of people potentially about to lose uninsured deposits, it'd be political suicide not to make the depositors whole. Moreover, that scenario is increasingly unlikely. More than likely what would happen is CDIC would arrange for another financial institution to take over all insured and uninsured deposits in full without CDIC's deposit insurance reserves even being tapped. In exchange, CDIC, CMHC, and other regulatory agencies would likely provide guarantees on a portion of the at-risk loans and mortgages acquired.

Cheers,
Doug

April 5, 2019
1:50 pm
Doug
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Vatox said
Is the foreign money deposits considered a separate category of 100k or is it just agglomerated with savings?  

It would be co-mingled with Canadian deposits within the respective deposit category. So, you have to factor in foreign exchange rates as I suspect the guarantee is based on $100,000 Canadian equivalent. 🙂

Cheers,
Doug

April 5, 2019
2:53 pm
Nehpets
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Doug said
It would be co-mingled with Canadian deposits within the respective deposit category. So, you have to factor in foreign exchange rates as I suspect the guarantee is based on $100,000 Canadian equivalent. 🙂 

Doug,

Not sure what you mean by "co-mingled". Are you saying that if I had $95,000 CDN on deposit in a CDIC FI, that I could only have $5,000 USD covered under the new CDIC rules? (exchange rate not used in my example, assuming the foreign currency would have to be converted to $CDN equivilant).

My understanding, and I stand to be corrected, was that I could have $100,000 CDN as well as $100,000 USD on deposit in the same CDIC FI, and each deposit would be covered.

Thanks for clarifying!

Stephen

April 5, 2019
6:45 pm
Vatox
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I take that as meaning: if you have 99k Canadian dollars and $1000 American , all in one institution, you will only get back $750 of that American money. Or whatever the exchange rate is at the time of filed bankruptcy. I don’t actually know, I’m just going with what Doug said.

April 5, 2019
7:15 pm
Top It Up
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From CDIC's website-

Notice: The Government of Canada has announced that changes to the CDIC Act to modernize and enhance CDIC deposit protection will come into force on April 30, 2020 and April 30, 2021. PLEASE NOTE: Until then, current coverage rules apply.

https://www.cdic.ca/about-deposit-insurance/whats-covered/

April 6, 2019
7:16 am
Koogie
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Believe this has bearing to the foreign currency coverage ...

https://laws.justice.gc.ca/eng/acts/C-3/nifnev.html
(2) Section 14 of the Act is amended by adding the following after subsection (2.91): Foreign currency exchange
(2.92) For the purposes of calculating the payment to be made by the Corporation in respect of any deposit payable in a foreign currency that is insured by deposit insurance, the amount of the deposit must be determined in Canadian currency in accordance with the Bank of Canada’s published exchange rate on the applicable date referred to in subsection (2.9) or, if there is no such published rate, the last exchange rate published by the member institution before that applicable date.

April 6, 2019
8:38 am
Norman1
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The new subsection 14(2.92) of the CDIC Act prescribes the exchange rate to be used.

Foreign currency coverage will be added by amending paragraph 12(a) to no longer exclude foreign currency deposits:

Duty to insure

12 The Corporation shall insure each deposit with a member institution except

(a) a deposit that is not payable in Canada or in Canadian currency;
(b) a deposit in respect of which Her Majesty in right of Canada would be a preferred claimant; and
(c) so much of any one deposit as exceeds one hundred thousand dollars.

None of the amendments say foreign currency deposits are "considered to be a single deposit separate from any other deposit for the benefit of that individual." So, there will be no separate $100,000 coverage for foreign currency as there will be for RDSP and RESP deposits.

That BNN Bloomberg article is sloppy. It suggests there is currently no CDIC coverage for RDSP and RESP deposits. That's false. Currently, there's just no separate coverage for RDSP and RESP deposits.

April 6, 2019
9:40 am
Vatox
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Thanks Norman1. That new 100k for the RDSP is important, because you can’t spread it around between institutions. You are only allowed one RDSP, so in order to maximize the insured amount you had to have no other deposits at that FI.

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