The Deposit Insurance Corporation of Ontario (DICO) has issued a strategy paper discussing the need to increase the size of the reserve fund used to pay depositors when a credit union has financial difficulty.
The current target for the DICO fund is in the range of 56 to 68 bps of total system deposits. DICO says Ontario has the smallest provincial fund measured in terms of a percentage of insured deposits.
Due to the changing risk profile of the system, DICO is proposing the target be raised to 100 bps by 2020. Deposit insurance premium rates would remain relatively stable throughout this period, unless material losses beyond those provided for in DICO’s plan are experienced. ◊