The Canadian Lenders Assurance Facility (Canada GFC)

Simon, Claire

The Canadian Lenders Assurance Facility (Canada GFC)

Journal of Financial Crises: Vol. 2 : Iss. 3, 635-647. Available at: https://elischolar.library.yale.edu/journal-of-financial-crises/vol2/iss3/32

Yale Program on Financial Stability Working Paper

13 Pages Posted: 26 Oct 2020

See all articles by Claire Simon

Claire Simon

Yale University - Yale Program on Financial Stability

Date Written: October 10, 2020

Abstract

Following a meeting of Group of Seven leaders in October 2008, the Canadian Minister of Finance announced the creation of a new Canadian Lenders Assurance Facility (CLAF). The facility enabled federally regulated deposit-taking financial institutions to access government insurance of up to three years on newly issued senior unsecured wholesale debt. This mirrored similar programs in other countries to ensure that Canadian financial institutions were not competitively disadvantaged in the wholesale debt market at a time when most developed countries were guaranteeing their banks’ debt. This competitive disadvantage never materialized, and the facility was allowed to expire on December 31, 2009, without ever being used.

Keywords: backstop, wholesale debt, insurance

JEL Classification: G01,G28

Suggested Citation: Suggested Citation

Simon, Claire, The Canadian Lenders Assurance Facility (Canada GFC) (October 10, 2020). Journal of Financial Crises: Vol. 2 : Iss. 3, 635-647. Available at: https://elischolar.library.yale.edu/journal-of-financial-crises/vol2/iss3/32, Yale Program on Financial Stability Working Paper, Available at SSRN: https://ssrn.com/abstract=3717983