If Canadians on the board believe that the Cyprus debacle can't happen here, think again. The recent Federal budget tells what will happen when the banks screw up. Page 145 of the budget document.

"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. (my underline) 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."

My interpretation of this is that, like in the recent banking disaster in Cyprus, depositors will have a levy imposed on their deposits (ie certain bank liabilities) to refinance the bank's capital. This is not something that will retain confidence in the bank or the Government. While it may reduce risk for taxpayers, it certainly will not be good for depositors, who will suffer because of the malpractices of the banks.

The budget document does not say, but what will happen to cash and securities held in RRSPs, TFSAs, etc held for their clients by a systemically important bank? Will there also be a levy imposed on these instruments? There are ways of taking cash out of the banking system to avoid the levy, but there is no way to remove an RRSP or TFSA from within a banking institution.

I would encourage those on this board who care, to contact their MP, the Minister of Finace and the Prime Minister and air their opinion.