Time for CDIC coverage limit revision?

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Feb 13th, 2023 9:54 am

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Feb 9th, 2023 2:45 pm

dskum [OP]: Jr. Member; Sep 13, 2008; 192 posts; 109 upvotes

Feb 9th, 2023 2:45 pm

Time for CDIC coverage limit revision?

Searched around and didn't get much details except one news post. Most countries Deposit Insurance are in 200K to 250K range, while CDIC still has a limit of 100K. With Covid and crazy inflation over the last two years, isn't it time they revisit the limit?

The last time the limit was increased back in 2003 from 60K to 100K. Based on an inflation adjustments what was $1 is now equivalent to $1.6. Its been 20 years!

Should'nt CDIC be revisiting these once 5-10 years? Even if not everything atleast the retirement accounts like RRSP?

Thoughts?

27 replies

Feb 9th, 2023 2:46 pm

dskum [OP]: Jr. Member; Sep 13, 2008; 192 posts; 109 upvotes

Feb 9th, 2023 2:46 pm

[unable to post a URl]

https://www.theglobeandmail.com/business/commentary/article-for-financial-stability-we-need-more-insurance-on-customers-bank

Feb 9th, 2023 3:02 pm

ADenariusSaved: Deal Fanatic; Jan 11, 2020; 5519 posts; 4366 upvotes; TheprimOrdialsingula…

Feb 9th, 2023 3:02 pm

Iono, I just use CIPF that insures $1 million per account. Not rich enough to have $100k in cash, hats off to anyone that does.

They basically just ODSP'ed deposit insurance =/. I'm telling ya, the lack of math savvy in society is going to kill us! People/govs don't understand inflation & personal finance.

Bank ISAs, CDIC! <= 4.50%: https://forums.redflagdeals.com/bank-in ... sd-2579841
HISA ETFs, NO CDIC! <= 4.96%: https://forums.redflagdeals.com/high-in ... s-2574002/

+1

Feb 9th, 2023 3:06 pm

will888: Deal Expert; Dec 12, 2009; 26027 posts; 15994 upvotes; Toronto

Feb 9th, 2023 3:06 pm

Probably extraneous expense that customers will eventually foot the bill. The insured amount should reflect account value changes over the years. If $1M is enough for 80% of customers, then it's good enough.

~~Koodo $40/6GB~~
Public Mobile $40/15GB, $35/20GB, lot less with rewards
Tangerine Bank, EQ Bank, Simplii

+1

Feb 10th, 2023 11:36 am

voodoo3xxx: Newbie; Feb 14, 2019; 62 posts; 92 upvotes

Feb 10th, 2023 11:36 am

Who insurers the insured funds?

A guess to my own question is anyone over $100K per Bail In laws.

Probably why the limit doesn’t go up, they don’t have the cash.

+2

Feb 10th, 2023 11:40 am

Quentin5: Deal Expert; Feb 8, 2014; 27638 posts; 11796 upvotes; Socially Distanced

Feb 10th, 2023 11:40 am

The 100K should be upped with inflation. Every 5 years would be great.
I would have no objection to 200K at this point.

In fact in Rand McNally they wear hats on their feet and hamburgers eat people

Feb 10th, 2023 12:02 pm

amplified: Deal Addict; Oct 13, 2006; 2821 posts; 1287 upvotes; Burnaby

Feb 10th, 2023 12:02 pm

One could argue it forces diversification in terms of product and member company.

But yeah it's a bit of a pain to have so many accounts which may be good and bad when it comes to personal information and cyber security.

Feb 10th, 2023 12:14 pm

Xtrema: Deal Fanatic; Sep 1, 2004; 9839 posts; 9426 upvotes

Feb 10th, 2023 12:14 pm

Do we need better protection?

1) How many of us has $100K in cash?

2) If you have $100K and RBC/TD/CIBC are in such bad shape that they can't give that to you, what good is money then?

This is all about giving you a bit of confidence trying out smaller financial institutes. Little else. If you increase the coverage, you just increase premiums banks have to pay which in turn they will just pass that back to you. Coverage ain't free.

+1

Feb 10th, 2023 12:29 pm

MayorOfToronto: Deal Fanatic; Jul 13, 2014; 5235 posts; 2840 upvotes; Parry Sound

Feb 10th, 2023 12:29 pm

We'd have a much bigger problem than insurance payouts if any of the big 5-6 banks collapse.

This insurance will help with smaller banks with smaller clients. That's about it.

Seriously, if TD or RBC or even the smaller CIBC was to go belly up... your insurance payment won't do anything because the economy would be in hell. I'd be surprised if they could even afford to pay out at that point.

This message has not been approved by The Office of The Mayor of Toronto.

+1

Feb 10th, 2023 1:00 pm

Biff88: Deal Addict; Mar 10, 2011; 2519 posts; 706 upvotes; Toronto

Feb 10th, 2023 1:00 pm

Xtrema wrote: ↑ Do we need better protection?

1) How many of us has $100K in cash?

2) If you have $100K and RBC/TD/CIBC are in such bad shape that they can't give that to you, what good is money then?

This is all about giving you a bit of confidence trying out smaller financial institutes. Little else. If you increase the coverage, you just increase premiums banks have to pay which in turn they will just pass that back to you. Coverage ain't free.

Many retirees have more than that in cash or GICs (a bad idea IMHO) especially the ones who are afraid to invest in the stock market. Also with the high price of Real Estate these days, any transaction will yield hundreds of thousands or millions in cash which may not be immediately redeployed.

Typically we fall behind and follow other countries, so I am sure that there will be a bump up from $100k at some point as it’s now appears to be quite low.

Feb 10th, 2023 3:14 pm

M8Rxmjsik: Deal Addict; Jan 30, 2012; 1704 posts; 1126 upvotes; TORONTO

Feb 10th, 2023 3:14 pm

voodoo3xxx wrote: ↑Who insurers the insured funds?

The Government of Canada through the Canada Deposit Insurance Corporation, www.cdic.ca.

What is the best way for the government not to pay depositors when a bank goes bankrupt? Have strong bank regulations so that banks don't go bankrupt

+1

Feb 10th, 2023 4:23 pm

MayorOfToronto: Deal Fanatic; Jul 13, 2014; 5235 posts; 2840 upvotes; Parry Sound

Feb 10th, 2023 4:23 pm

M8Rxmjsik wrote: ↑The Government of Canada

In other words: the taxpayer.

And what happens if the economy fails so badly that one of the big banks collapses?

This message has not been approved by The Office of The Mayor of Toronto.

Feb 10th, 2023 4:38 pm

Xtrema: Deal Fanatic; Sep 1, 2004; 9839 posts; 9426 upvotes

Feb 10th, 2023 4:38 pm

MayorOfToronto wrote: ↑ And what happens if the economy fails so badly that one of the big banks collapses?

Time to seize the means of production, comrade.

Feb 10th, 2023 5:47 pm

MayorOfToronto: Deal Fanatic; Jul 13, 2014; 5235 posts; 2840 upvotes; Parry Sound

Feb 10th, 2023 5:47 pm

Xtrema wrote: ↑ Time to seize the means of production, comrade.

So the entire nation can fail with less chance of recovery instead of a handful of corporations?

No thanks.

This message has not been approved by The Office of The Mayor of Toronto.

Feb 10th, 2023 5:58 pm

ADenariusSaved: Deal Fanatic; Jan 11, 2020; 5519 posts; 4366 upvotes; TheprimOrdialsingula…

Feb 10th, 2023 5:58 pm

Xtrema wrote: ↑ Time to seize the means of production, comrade.
One of the first economic videos I've ever seen, useful:
Economic Crisis: My Two Rubles

Bank ISAs, CDIC! <= 4.50%: https://forums.redflagdeals.com/bank-in ... sd-2579841
HISA ETFs, NO CDIC! <= 4.96%: https://forums.redflagdeals.com/high-in ... s-2574002/

Feb 10th, 2023 6:23 pm

gibor365365: Deal Addict; Apr 27, 2015; 2946 posts; 1604 upvotes; Mississauga

Feb 10th, 2023 6:23 pm

MayorOfToronto wrote: ↑ We'd have a much bigger problem than insurance payouts if any of the big 5-6 banks collapse.

This insurance will help with smaller banks with smaller clients. That's about it.

Seriously, if TD or RBC or even the smaller CIBC was to go belly up... your insurance payment won't do anything because the economy would be in hell. I'd be surprised if they could even afford to pay out at that point.

Then BoC will print a lot of paper money

"All animals are equal but some animals are more equal than others" George Orwell

Feb 10th, 2023 6:27 pm

gibor365365: Deal Addict; Apr 27, 2015; 2946 posts; 1604 upvotes; Mississauga

Feb 10th, 2023 6:27 pm

Biff88 wrote: ↑ Many retirees have more than that in cash or GICs (a bad idea IMHO) especially the ones who are afraid to invest in the stock market. Also with the high price of Real Estate these days, any transaction will yield hundreds of thousands or millions in cash which may not be immediately redeployed.

Typically we fall behind and follow other countries, so I am sure that there will be a bump up from $100k at some point as it’s now appears to be quite low.

We have about 55-60% in stocks and rest in HISA/GIC (close to 1M). In order to have insurance, I need to distribute money among 5-6 different banks and create pseudo-cash accounts to be insured by CIDC (as insurance goes by bank/account type/account owners) .
AFAIK, US has 250K insured , so it's 3.5 times higher than in Canada!

"All animals are equal but some animals are more equal than others" George Orwell

Feb 10th, 2023 6:36 pm

Xtrema: Deal Fanatic; Sep 1, 2004; 9839 posts; 9426 upvotes

Feb 10th, 2023 6:36 pm

gibor365365 wrote: ↑ Then BoC will print a lot of paper money

Ask how well Venezuela is doing.

Only country that can do that with minimal impact is USA. Everybody else print money, inflation will get bad.

+2

Feb 10th, 2023 6:42 pm

gibor365365: Deal Addict; Apr 27, 2015; 2946 posts; 1604 upvotes; Mississauga

Feb 10th, 2023 6:42 pm

Xtrema wrote: ↑ Ask how well Venezuela is doing.

Only country that can do that with minimal impact is USA. Everybody else print money, inflation will get bad.

If even one of big 6 banks goes belly up, BoC won't have another choice! CIDC won't have enough cash to pay insurance (even with 100K limits) and all other bank will be suffering as a lot of ppl will be withdrawing cash and hide it under the matrasses

. Obviously we gonna have then hyperinflation and CAD$ devaluation

"All animals are equal but some animals are more equal than others" George Orwell

Feb 10th, 2023 6:47 pm

Xtrema: Deal Fanatic; Sep 1, 2004; 9839 posts; 9426 upvotes

Feb 10th, 2023 6:47 pm

gibor365365 wrote: ↑ If even one of big 6 banks goes belly up, BoC won't have another choice! CIDC won't have enough cash to pay insurance (even with 100K limits) and all other bank will be suffering as a lot of ppl will be withdrawing cash and hide it under the matrasses . Obviously we gonna have then hyperinflation and CAD$ devaluation

Back to original point, what's the point of raising CDIC coverage? This only safeguard your money in small community banks and credit unions. If you have cash in big banks, CDIC is last of your concern as they are too big to fail.

So for the ones who want to raise CDIC coverage, all it means is raising cost of doing business which means financial products get costlier.

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