Home Regulators Canada Deposit Insurance Corporation (CDIC)

Canada Deposit Insurance Corporation (CDIC)

This page showcases the importance of the CDIC (Canada Deposit Insurance Corporation) in the Canadian economy and how it affects money transfer customers. You will learn about their responsibilities, their work’s importance and the regions they cover. Furthermore, you will discover why they build trust in the economy so that you have peace of mind when sending money to Canada

Updated: 09/09/2022
Read time: 7 minutes
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What Is the Canada Deposit Insurance Corporation (CDIC)?

Parliament created the Canada deposit insurance corporation in 1967, and it is a Canadian federal Crown Corporation, meaning it has a mixture of public policy and commercial objectives. The idea behind creating the CDIC is to offer insurance to commercial banks and savings institution depositors. This should provide confidence in the Canadian banking system because if a bank were to go under, then depositors can get their funds back through the Canada deposit insurance corporation. Deposit insurance protects your savings if your financial institution fails. This applies to eligible deposits held at CDIC member institutions in Canada.

The insurance in the case of bank failure is up to 100,000 CAD, and you do not need to sign up for CDIC deposit protection, the insurance it’s free and automatic. Therefore, every account holder of these financial institutions is covered. Deposit insurance covers the following types of eligible deposits: savings and chequing accounts Guaranteed Investment Certificates (GICs) and other term deposits in foreign currency (for example, USD) If your financial institution fails, you don’t have to file a claim.

In addition, the CDIC provides insurance for various saving accounts, and the bank must be eligible for member institutions of the CDIC. However, eligible deposits in mortgage tax accounts will no longer receive separate CDIC coverage and will be combined with eligible deposits in other categories such as savings in one name

The headquarters of the CDIC is in Ottawa, and the agency executive is Robert Sanderson. Also, they are accountable to the Government of Canada, which means it is a legitimate regulatory body in the Canadian financial markets. 

What Is the Canada Deposit Insurance Corporation (CDIC) Responsible for?

Now we will delve deeper into the responsibilities of the Canada deposit insurance corporation. You will find out how they safeguard consumers of the Canadian banking system to ensure that their money is protected against unforeseen events. 

  • Provides insurance: the primary responsibility of the CDIC is to offer insurance to all account holders of financial institutions that are members. The insurance amount is 100,000 CAD and covers a variety of different unforeseen financial events. 
  • Promotes stability: the CDIC has the task of promoting stability in the Canadian financial system. They do this by ensuring that banks can safeguard the depositor’s money and step in with payouts when that is not possible. 
  • Help depositors: the primary way the CDIC promotes confidence in the Canadian financial markets is by helping depositors. When they have lost money from the banks or financial institutions, then the CDIC can offer payouts. 

The type of financial institutions the Canada deposit insurance corporation accepts into their membership include banks, loan and trust companies governed by the Cooperative Credit Associations Act, and federally regulated credit unions. 

The CDIC is not a bank or a private insurance company. Instead, they are funded by the premiums that member institutions pay, and there is no financial help from the general public. This shows member institutions are set up to benefit the public without forcing them to pay extra insurance costs. 

Contact your provincial deposit insurer or speak to your financial institution to find out how your eligible deposits are protected.

Why Is the Canada Deposit Insurance Corporation (CDIC) Important?

This section will outline the importance of the CDIC. You will learn why they are an integral part of the Canadian financial system and how they can help money transfer customers when sending money abroad

  • Protects the general public: the average person would not have confidence putting large sums of money into a bank if the funds were not insured. However, since they know that the CDIC can retrieve their money, they are more willing to deposit it. This allows the banks to function correctly and keep the Canadian economy healthy. 
  • Add trust to banks: consumers can look at banks with a membership with the Canada deposit insurance corporation and choose accordingly. Banks that want to promote confidence in their operation could get a membership to offer their customers backup options if they were to go bankrupt. 
  • Improves the economy: since people will be willing to deposit more money at their bank, this gives them a larger pool of funds to invest in and offer services. So, for example, they can hand out more mortgages to customers interested in buying a house. 
  • Stabilizes the economy: when a large bank goes bankrupt, the CDIC can step in and offer support for the depositors. This ensures they can continue being functioning members of the economy. Without the payout of insurance money, it would damage the economy and potentially slow down growth. 

The CDIC would have resolution plans if specific banks were to go out of business and could not honour the depositor’s money. This includes plans for Canada’s largest banks, and there are six that fall into this category. 

The financial collapses in Canada include Security Home Mortgage Corporation in 1996, the NAL Mortgage Company in 1995, the North American Trust Company in 1995 and the Income Trust Company in 1995. 

Canada Deposit Insurance Corporation Regulations

This section highlights specific aspects of the CDIC so you can better understand them at a glance. In addition, it allows you to figure out the scope of their operation and where the responsibilities end. 

Regulations: the CIDC act ensures that the organization can use its powers to create the rules and laws it operates. They make various by-laws which specify how they resolve problems that fall into their domain. 

For example, when foreign currency funds are lost in bank accounts, they need to determine what exchange rate will be used to convert that amount into CAD. 

Crimes: the CDIC does not deal with crimes, they are simply a financial organization that insure depositor money in their member financial institutions. 

Industry: they welcome a wide variety of financial institutions into their membership scheme, which includes banks and federally regulated credit unions. 

Accountability: the Canada deposit insurance corporation is accountable to the Government of Canada. Also, they serve the general public since that is their organization’s purpose. 

What Regions Does the Canada Deposit Insurance Corporation Cover?

The Canada deposit insurance corporation is only responsible for the financial institutions within Canada and, more specifically, on their member institutions list. This means that they do not have any jurisdiction outside of Canada. 

When might you encounter the CDIC?

You may encounter the CDIC when your bank or other financial institution has financial problems. For example, if they are on the CDIC member institutions list and have gone bankrupt, you will need to interact with the CDIC to get your money back. The details of how you might get your funds back will change on a case-by-case basis. 

Can the Canada Deposit Insurance Corporation Make New Rules? 

Yes, the CDIC has the authority to change how they operate. For example, these rules might relate to the period it takes to pay back depositors, or what entry requirements the financial instructions must adhere to for membership access. 

How to Contact the Canada Deposit Insurance Corporation?

You may want to contact the CDIC if your financial institution has lost your money or if you want to learn more about how you are protected. Money transfer customers can know how funds are protected when sending money to Canada

  • Live chat: you can engage in a live chat session using the button in the bottom right-hand corner of the official website. 
  • Social media: you can interact with the CDIC on one of their social media profiles, which include Facebook, Twitter, LinkedIn, Instagram and YouTube. 
  • Email: send the CDIC an email at info@cdic.ca
  • Phone: the general inquiries number is 1-800-461-2342

Why is the Canada Deposit Insurance Corporation Essential?

To conclude, the CDIC is a federal Crown corporation created by parliament in 1967 and an essential organization for maintaining the trust and stability of the Canadian economy. They step in when depositors need them most and offer insurance payouts of up to 100,000 CAD for various cases. This allows international money transfer customers to believe their funds will be safe when held in CDIC member financial institutions. 

We encourage you to continue investigating the process of transferring money to Canada. You can start with Send Money To Canada and Send Money from the United States to Canada. Reading through these guides will help you learn about the best companies for saving money on fees and getting the most competitive FX rates

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April Summers

April is a trained journalist and the Content Editor for MoneyTransfers.com. She has 10 years experience writing about a diverse range of subjects, from financial services to arts and entertainment. When she’s not writing about global remittances she can be found daydreaming about her next holiday abroad.

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