EC223 Lecture Notes - Lecture 17: Procyclical And Countercyclical, Basel Accords, Camels Rating System
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Bank of canada: chartered banks, tmls, cucps, examine the books. Office of the superintendent of financial institutions (osfi) Canadian deposit insurance corporation (cdic: chartered banks, tmls, cucps, provide insurance of up to ,000 for each depositor, examining books, and impose restrictions on assets they can hold. Bank panics and the need for deposit insurance. Bank failure: when a bank is unable to meet its obligations, so must go out of business. Deposit insurance and the cdic: short circuits bank failures and contagion effect, cdic was created in 1967, handled 43 bank failures. Two primary methods to handle a failed bank: payoff method: allow the bank to fail, purchase and assumption method: finding a willing merger partner who takes over all of the failed (cid:271)a(cid:374)k"s lia(cid:271)ilities. Cdic ofte(cid:374) p(cid:396)o(cid:448)ide the (cid:373)erger partner with a subsidized loan. The central bank can provide support to troubled institutions by acting as a lender of last resort.
