In recent times we have heard that banks on Cyprus agreed to take money from deposits in their banks to meet conditions of the International Monetary Fund and World Bank.
This frightened a lot of seniors in Canada who have savings in Canadian banks.
“If it can happen there, could it happen here?” was a common question I heard. The Harper government assured us that it couldn’t happen here.
I recently got a copy, from my MP of Jobs, Growth and long-term Prosperity, Economic Action Plan 2013.
Starting on page 144 and headed Establishing a Risk Management Framework for Domestic Systemically Important Banks I read on page 145, “In the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risk to taxpayers.”
What are the risks to individual seniors who have sizeable deposits in the bank?
I am not an accountant or an economist so I find this wording confusing, hence my questions.
Does this mean that a bank could take GIC and account deposits in the event that a consequence of their actions left them short of money?
What is the consequence for seniors who are relying on that bank deposit to support them in their retirement? How would the current deposit insurance on bank deposits be applied? Why has government passed the risk from itself onto individuals?
I think seniors need to talk to their MP about this. And seriously consider moving their money to a provincially regulated credit union.