Ottawa expands deposit protection for savers | GIC discussions | Discussion forum

Unfortunately there is nothing here for the average person with savings accounts and ordinary GICs.
Disappointing.

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.

RDSP coverage! I like that!

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

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

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.