• Suppose Paul has the following deposits with ABC Bank, a member of CDIC.

Account type. Funds

(in Canadian dollars except where noted)

Chequing account $10,000

Savings account $80,000

USD term deposit $50,000

3-year GIC $100,000

7-year GIC $80,000

• In the event of bank failure, how much of Paul's deposits is insured by the CDIC?
• If the CDIC decides ABC Bank is too big to fail, what will happen?
• Of the payoff method and purchase-and-assumption method, which one will CDIC use? Why?
• Why might the CDIC declare ABC bank too big to fail?