Problem: Suppose Paul has the following deposits with ABC Bank, a member of CDIC.
Account type
|
Funds (in Canadian dollars except where noted)
|
Chequing account
|
$10,000
|
Savings account
|
$80,000
|
USD term deposit
|
$50,000
|
3-year GIC
|
$100,000
|
7-year GIC
|
$80,000
|
Required:
- In the event of bank failure, how much of Paul's deposits is insured by the CDIC?
- If the CDIC decides ABC Bank is too big to fail, what will happen?
Of the payoff method and purchase-and-assumption method, which one will CDIC use? Why?
- Why might the CDIC declare ABC bank too big to fail?