Canadian Bail-In: When Canuck Depositors Get Smoked Will The CDIC Be Any Help?

Not long after the Cyrpus "bail-in" happened markets were spooked when Dutch finance minister Jeroen Dijsselbloem (a.k.a Diesel-BOOM or just D-Boom for short) called it "a template" for future rescue actions.

---

Notwithstanding that in recent days ECB head Mario Draghi has backed away from the "bail-in as template" position, the "template" seems to have already found its way across the pond – to Canada and popped up in the proposed budget (PDF) in an innocuous sounding paragraph on page 155:

"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."

In the wake of the alarm emanating from this, both officials and government apologists (like Garth Turner) have downplayed and admonished any "hysteria" from this:

Even some people who certainly should know better,..have been sucked into the vortex of rumour, misinterpretation and doomsterism…The hysteria is unfounded because the premise is wrong. The government is not proposing legislation of allow the confiscation of bank accounts to ‘bail-in’ a failing bank so taxpayers need not do the job. That’s absurd in a country where we have a crown corporation insuring deposits.(emphasis added)

More...

---