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s part of the 2013 budget in Canada, the Minister of Finance tabled the Economic Action Plan 2013 which included the newest buzzword 'bail-in'.
Source: budget.gc.ca/.../...
Page 145
The [Canadian] 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. Systemically important banks will continue to be subject to existing risk management requirements, including enhanced supervision and recovery and resolution plans.
This risk management framework will limit the unfair advantage that could be gained by Canadas systemically important banks through the mistaken belief by investors and other market participants that these institutions are too big to fail.
A depositor is an unsecured creditor to a bank. The Canadian government presents its position to be one of shielding the taxpayer from the need to pay for bailing out a failing bank. As a taxpayer that is comforting.
However as a depositor, the phrase rapid conversion of certain bank liabilities into regulatory capital concerns me. My deposit is the banks liability. Could depositors funds fall under the definition of certain bank liabilities?
I searched the entire 442 page document and I cannot find where the term certain bank liabilities is defined.
The prudent approach I believe would be to assume that under certain conditions, certain bank liabilities will include depositors funds; at least those funds in excess of CAD 100,000 which is our so-called insured amount.
Even if it has noble intentions now, under a credit and derivatives collapse scenario, it is conceivable that the Canadian government could be coerced or bullied by external agents into grabbing depositors funds just like what is happening in Cyprus.
I find the newest bail-in term being used since the Cyprus debacle quite amusing. It reminds me of the sit-in and love-in terms of the peace/hippie generation.
We all seem to be floating on the bathwater of fiat currency liquidity. The tub is being drained at the opposite end from where we are floating. The EU is circling the drain. The central banks are feverishly trying to replenish the tub with thimbles full of water, but it appears inevitable that some will go down the drain, whilst others will be left high and dry. The central bankers only have thimbles, not a drain stopper.
<broken link removed>
s part of the 2013 budget in Canada, the Minister of Finance tabled the Economic Action Plan 2013 which included the newest buzzword 'bail-in'.
Source: budget.gc.ca/.../...
Page 145
The [Canadian] 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. Systemically important banks will continue to be subject to existing risk management requirements, including enhanced supervision and recovery and resolution plans.
This risk management framework will limit the unfair advantage that could be gained by Canadas systemically important banks through the mistaken belief by investors and other market participants that these institutions are too big to fail.
A depositor is an unsecured creditor to a bank. The Canadian government presents its position to be one of shielding the taxpayer from the need to pay for bailing out a failing bank. As a taxpayer that is comforting.
However as a depositor, the phrase rapid conversion of certain bank liabilities into regulatory capital concerns me. My deposit is the banks liability. Could depositors funds fall under the definition of certain bank liabilities?
I searched the entire 442 page document and I cannot find where the term certain bank liabilities is defined.
The prudent approach I believe would be to assume that under certain conditions, certain bank liabilities will include depositors funds; at least those funds in excess of CAD 100,000 which is our so-called insured amount.
Even if it has noble intentions now, under a credit and derivatives collapse scenario, it is conceivable that the Canadian government could be coerced or bullied by external agents into grabbing depositors funds just like what is happening in Cyprus.
I find the newest bail-in term being used since the Cyprus debacle quite amusing. It reminds me of the sit-in and love-in terms of the peace/hippie generation.
We all seem to be floating on the bathwater of fiat currency liquidity. The tub is being drained at the opposite end from where we are floating. The EU is circling the drain. The central banks are feverishly trying to replenish the tub with thimbles full of water, but it appears inevitable that some will go down the drain, whilst others will be left high and dry. The central bankers only have thimbles, not a drain stopper.