Courtesy CBC News
The federal government will provide a "backstop" to the country's banks, offering insurance on their wholesale term borrowing, Finance Minister Jim Flaherty said Thursday.
Flaherty said in Ottawa that the government is making the guarantee available so the country's banks aren't put at a competitive disadvantage amid the global credit squeeze. By doing so, Canada is following similar steps already taken by more than a dozen countries, including the U.S., the U.K., Australia, Spain, Ireland, Germany and Sweden.
"Our actions will help Canadian financial institutions secure access to longer-term funds so that they can continue lending to consumers, homebuyers and businesses in Canada," Flaherty said.
Flaherty said the insurance will be offered to federally regulated deposit-taking institutions on commercial terms, with no expected cost to taxpayers.
He told reporters that the program is only temporary, lasting from November to April. He said it will be up to the financial institutions to decide if they want to pay the premium to insure their debt.
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