Are Canadian Banks Safe from a Bank Run in 2023? (2024)

With the recent bank runs in the United States, many Canadians are wondering how likely it is for something like that to happen here. This is because of the most notable bank run, the Silicon Valley Bank.

Not surprising since this is the largest bank run since 2008.

Essentially how a bank run works is when a substantial amount of people who have their money in a bank, all withdraw it. This puts banks at risk of using up all of their cash reserves. When this happens, more people then worry about the bank becoming insolvent and withdraw their money. The end result of this is the bank not having enough money to cover withdrawals. While this can happen in Canada, let's take a look at how bank runs in Canada differ from those in the US.

Canadian Banks Compared to US Banks

When it comes to bank runs, the risk for Canadian banks is much lower. That said, it really just depends on the type of bank to determine their overall risk level. In regards to Canada's top 5 banks, though, they are not only some of the safest banks in Canada, they are some of the safest in the world.

The top 5 banks: Royal Bank of Canada (RBC), Toronto Dominion (TD), Bank of Montreal (BMO), Scotiabank and Canadian Imperial Bank of Commerce (CIBC), are all banks that are large, well capitalized and diversified. Simply put, they don't put all of their eggs in one basket.

That said, just because these 5 banks are doing well, that doesn't mean there isn't any risk when it comes to banking in Canada. Smaller, more independent banks can have a larger risk of a bank run due to the fact that they don't have an established supported structure in banks.

Essentially, it's similar in the US. The Silicon Valley Bank was a smaller bank that took a lot of risks. They took short-term cash deposits from tech clients and purchased longer maturity US mortgage bonds. The larger US banks, specifically the top 4, have a similar structure to the top 5 Canadian banks. The only difference is that the Canadian banks have a larger share of loans. This is one of the main factors that makes them safer than American banks, even the larger ones.

The Canadian financial system and the American financial system aren't really that different. They both have central banks and, instead of being insured by the CDIC the US banks are insured by the Federal Deposit Insurance Corporation. Their central bank is known as the Federal Reserve. Since all of these things are similar, the thing that sets them apart is the fact that there are different regulations.

The Overall Risk of Canadian Banks

While there is still a risk of a bank failure, the overall risk is relatively low. Bank failures are actually very rare in Canada, compared to the US. Canada has had 43 incidents since 1967, whereas the US has had over 500 since 2000. There are 2 main reasons for this:

  1. Strict banking regulations
  2. The top 5 banks and the fact they are well capitalized

To reduce the risk of Canadians, there are even fail safes in place for a bank run. When you bank with many Canadian banks, your funds amount up to $100,000 is insured by the CDIC (Canada Deposit Insurance Corporation) which is a Federal Crown Corporation. This means that if something does happen to the banks, the CDIC can pay you out your insured deposits in just a matter of days though. That said, things like stocks, bonds (including government bonds) and mutual funds are considered to be uninsured deposits.

Even with all that in mind, bank runs aren't impossible for Canadians. With inflation in the Canadian economy, and really all over the world, the rise of interest rates by Canada's central bank makes things a little less stable. This can make things much more difficult for the smaller niche banks, just like what happened in the US. And since not every bank is insured, they might not be covered.

The Safety of Credit Unions in Canada

While credit unions are still a financial institution, they are still different from the banks. They are not insured by the CDIC like the banks are, but they are insured by the provinces and follow the rules indicated by the Credit Unions Act. The main difference between a credit union and a bank is that credit unions are not for profit whereas banks are financial institutions that are for profit.

Really, banking with a Canadian Credit Union is very similar to banking with a traditional Canadian bank, As mentioned, if an insured Canadian bank fails then eligible deposits are insured by the CDIC. With credit unions eligible deposits are also insured, but by a different insurer. The minimum insured amount on eligible accounts is usually $100,000. Some credit unions will insure higher than that as well.

The Security of Canadian Banks

Canadian banks are very secure, especially with the protection of the CDIC. It's important to know that the CDIC doesn't just insure $100,000 per client, it's per account. The types of accounts they insure are:

  • Savings accounts
  • Chequing accounts
  • GIC's
  • Term deposits
  • Money orders
  • Certified cheques
  • Bank drafts

The Canadian financial system is also regulated by the Office of the Superintendent of the Financial Institutions. It was established in 1987 and is independent of the Government of Canada. Essentially they supervise and regulate federally registered:

  • Banks
  • Insurers
  • Trust and loan companies
  • Private pension plans (those subject to federal oversight)

They also closely work with the CDIC, Government of Canada, Bank of Canada and the Financial Consumer Agency of Canada.

Current Banks and the Risk of Failing

At this point no, Canadian banks are not at risk of failing or going into a banking crisis. We have already discussed the reasons why banking in Canada is more secure but, it's notable to point out that the banking system in Canada is more concentrated. Compared to 7,000 US financial institutions, Canada only has 28. Strangely enough they are also more diverse making Canadian deposits more secure.

Bank Runs in the US

While the most talked about recent bank run was the Silicon Valley collapse, it wasn't the only one. Other banks that have recently failed in the US are Signature Bank which collapsed in March of 2023 and the second largest bank failure since 2008, as well as First Republic Bank in May of 2023. And these are just the US banks. It doesn't include the global financial system.

It's no surprise that this could cause some panic in the banking industry and lead to a global financial crisis. That's why global central banks are looking to get ahead of the problem in order to verify it doesn't affect anyone's bank deposits.


No matter who you bank with or where you bank, there is always going to be some level of risk. US banks, Canadian banks as well as other financial institutions around the world aren't going to be immune to economic changes. That said, it's important to be careful when choosing your bank. You may not be immune to risk but going through the bank's policies and procedures in the case of a bank run is a good place to start.

Being that there are only 28 financial institutions to choose from, you definitely don't have as many options as the US. This means though, that there is less risk. The more choices there are in regards to banks, the higher the risk of failing. That paired with the fact that the top 5 banks in Canada are some of the most stable banks in the world is also reassuring.

Are Canadian Banks Safe from a Bank Run in 2023? (2024)


Are Canadian Banks Safe from a Bank Run in 2023? ›

Canadian banks are very secure, especially with the protection of the CDIC. It's important to know that the CDIC doesn't just insure $100,000 per client, it's per account. The types of accounts they insure are: Savings accounts.

Are any Canadian banks at risk? ›

Thankfully, experts say Canadian banks are significantly less vulnerable to failure than our neighbours' to the south, for many reasons, and your money in a Canadian bank will continue to be safe.

Are Canadian banks safe 2023? ›

They're strong and durable, and we've seen that time and time again. Think of the last three external shocks—[the financial crisis of] '08-'09, the pandemic, 2023. Tested and trusted is our brand here,” says Labrèche. “Canada really is a paragon of safe banking,” he stresses.

Are Canadian banks safer than US banks? ›

Canada regulates its banks very strictly and doesn't let many players enter the market. As a result, Canadian banks tend to be safer than U.S. banks. In this article, I will explore two Canadian bank stocks that are relatively safe compared to their U.S. cousins.

How safe is your money in Canadian banks? ›

Most of our bank deposits today are insured by the Canada Deposit Insurance Corporation (CDIC), which protects up to $100,000 of eligible deposits at member banks.

What Canadian banks are too big to fail? ›

Royal Bank of Canada (RBC) and TD Bank remain Canada's only members on the list of global systemically important banks (G-SIBs), which defines banks considered “too big to fail” by regulators. The Financial Stability Board (FSB) published its G-SIB list for 2020 on Nov. 11.

Is TD Bank in danger of failing? ›

With roughly $1.26 trillion in assets, TD Bank would certainly be considered too big to fail, and many believe the large banks are set to benefit from this recent banking crisis because they're likely to be seen as a safe place to transfer funds into.

Are Canadian banks in financial trouble? ›

The federal Department of Finance said in a statement emailed to CBC News that the country has "one of the strongest and most resilient banking systems" in the world, with robust protections for financial institutions, deposits and the financial system itself.

How solid are Canadian banks? ›

The World Economic Forum consistently ranks Canada's banks among the world's safest. Competent regulators have overseen stress tests, tightened lending standards and delinquency rates are low.

How will Canadian banks do in 2023? ›

-- While macroeconomic conditions are amplifying some key vulnerabilities, DBRS Morningstar expects the overall financial impact to be manageable, as the Big Six are entering 2023 with strong asset quality, ample liquidity buffers, and sound capital levels.

Are Canadian banks at risk of failure? ›

Yes, it's rare, but they have and it could happen. The Canada Deposit Insurance Corporation (CDIC) is a federal Crown corporation that exists to protect eligible deposits to member financial institutions against their failure.

What happens if a bank collapses in Canada? ›

If a bank does fail, CDIC has tools to resolve them while protecting depositors and contributing to the stability of the financial system. Resolution is the process by which financial institutions that are failing or likely to fail are restructured or closed.

What country has the safest banking system in the world? ›


How can I protect my money from bank collapse Canada? ›

Deposit insurance protects your savings if your financial institution fails. You don't have to apply or pay for deposit insurance. The Canada Deposit Insurance Corporation (CDIC) automatically insures your eligible deposits. This applies to deposits held at CDIC member institutions in Canada.

Can the Canadian government take my money from your bank account? ›

Will CRA Take All The Money In My Account? CRA will freeze your bank account until your tax debt is paid or until you reach a suitable agreement. If the funds saved in your account do not cover your debt, the CRA will take all that money and keep your account frozen until the situation is resolved.

Where is the safest place to put your money in Canada? ›

Where is the safest place to keep money in Canada? One of the safest places to keep your money is in a bank account at a reputable financial institution, which provides deposit insurance for up to $100,000 or more through the Canada Deposit Insurance Corporation (CDIC).

What banks are most at risk right now? ›

These Banks Are the Most Vulnerable
  • First Republic Bank (FRC) . Above average liquidity risk and high capital risk.
  • Huntington Bancshares (HBAN) . Above average capital risk.
  • KeyCorp (KEY) . Above average capital risk.
  • Comerica (CMA) . ...
  • Truist Financial (TFC) . ...
  • Cullen/Frost Bankers (CFR) . ...
  • Zions Bancorporation (ZION) .
Mar 16, 2023

What is the safest bank in Canada to invest in? ›

Here are some of the best Canadian bank stocks to buy now:
  1. Royal Bank of Canada (RY-T) Market Cap: $113.45 B. ...
  2. Toronto Dominion Bank (TD-T) Market Cap: $104.37 B. ...
  3. Bank of Nova Scotia (BNS-T) ...
  4. Bank of Montreal (BMO-T) ...
  5. Canadian Imperial Bank of Commerce (CM-T) ...
  6. National Bank of Canada (NA-T) ...
  7. Laurentian Bank of Canada (LB-T)
Oct 27, 2023

What Canadian banks have been hacked? ›

At the beginning of the week two Canadian banks, Bank of Montreal (BMO) and Simplii Financial owned by Canadian Imperial Bank of Commerce (CIBC), informed their customers that their personal data may have been compromised.

Can banks take your money in a recession Canada? ›

You can keep money in a bank account during a recession and it will be safe through FDIC and NCUA deposit insurance.

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