During a recent class, I introduced to my students the frightening concept of a bank run.
The most recent example of a bank run that comes to mind is that of infamous FTX, the offshore, crypto-exchange, led by Sam Bankman-Fried. The collapse of FTX, which wasn’t directly regulated by the American Securities and Exchange Commission, is responsible foraccording to estimates by the U.S. Commodity Futures Trading Commission.
The CDIC is a federal Crown corporation with a mandate to provide insurance against the loss of part or all of deposits and to contribute to the stability of the financial system in Canada. The CDIC’s insurance is also much lower than the comparable program in the U.S. — FDIC — which stands at $250,000 , and the one offered in the European Union where €100,000 , per deposit are insured. This leaves Canada far behind in terms of investors’ protection.
To be clear, while $100,000 is the CDIC’s limit per eligible account, per institution, depositors can still have a wider protection. “Depositors can maximize their coverage by placing their savings in the separately insured categories and at separate member institutions,” says Larocque. “The deposit insurance coverage could be as high as $800,000 per member institution by combining the coverage of the current eight categories.
abarnea1 Tell us the banks are going to fail without telling us the banks are going to fail.