Protecting More, Risking Less
Canada should boost deposit insurance, and here's why. The federal government's review of the deposit insurance framework is welcomed, as much has changed since the coverage limit was increased to $100,000 in 2005.
Inflation has eroded the real value of coverage, and uninsured balances have grown sharply, rising from 42% of Canada Deposit Insurance Corporation (CDIC)-eligible deposits in 2005 to 64% in 2024. The proliferation of social media and mobile banking has also heightened the risk of rapid depositor runs in the event of a crisis.
- The federal government has proposed raising deposit insurance coverage to $150,000 per category.
- To $500,000 for non-retail depositors.
- To at least $1 million for temporary high balances resulting from significant life events.
This proposal raises policy and practical challenges.
No direct quote available in the text.
Author's summary: Canada should increase deposit insurance to protect citizens' deposits.
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