Thursday, March 28, 2013

Uh-oh: Flaherty's Canadian "Bail-in" Scheme!

Coming to Canadian banks soon?
Think a Cyprus-type confiscation of your money in your bank account can't happen in Canada?  Here's a direct quote from pages 144-145 of our Canadian "Economic Action Plan 2013": "Establishing a Risk Management Framework for Domestic Systemically Important Banks ... The Government proposes to implement a "bail-in" regime for systemically important banks. This regime will be designed to ensure that, 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 risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants." Does this remind you of Cyprus?  Does "certain bank liabilities" mean your hard-earned deposits?  Remember, this "action plan" (budget) was written well before the Cyprus mess!  Unbelievable.