Q&A: Manitoba credit unions

Question: Manitoba credit unions such as Achieva Financial currently pay well above average bank interest on GICs. As these deposits are not covered by the Canada Deposit Insurance Corporation (CDIC) but rather the Deposit Guarantee Corporation of Manitoba (DGCM), I am seeking input on their overall security. Do you have a point of view or related articles that you could share with me? – Bob S.

Gordon Pape answers: The DGCM is not a branch of the Manitoba government, nor does the province have any legal liability to backstop the organization. The DGCM is funded by quarterly assessments of all participating credit unions and caisses populaires. The amount in the fund is supposed to remain at an “acceptable level” to cover any bail-out. But in the event of several failures during a short time span, it is possible that the fund’s resources could be strained to the point where depositors had to wait to get their money or accept a reduced payment. The fact there is no limit on the amount of protection (unlike the $100,000 maximum of the CDIC) enhances this risk.

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