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Canada’s federal government has proposed raising the deposit insurance limit to $250,000, marking the first increase in more than two decades. The change, introduced as part of Budget 2026, would more than double the current Canada Deposit Insurance Corporation (CDIC) cap, which has remained at $100,000 since 2005.
A Long-Overdue Increase
The government described the move as an effort to modernize the deposit insurance framework. The CDIC limit defines how much of a consumer’s bank deposits the government protects if a financial institution fails. For over 20 years, that protection has stayed unchanged at $100,000.
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In 2023, the Bank and Trust Companies Association urged then-Finance Minister Chrystia Freeland to act. The group wrote to her directly, calling for the CDIC to double its coverage to at least $200,000 per depositor. The association also noted that Canada holds the lowest deposit insurance level among G7 nations.
Meanwhile, data from DBRS Morningstar shows that about 65 percent of deposits at Canada’s six largest banks currently sit uninsured. Those banks include Royal Bank of Canada, TD Bank, Bank of Montreal, CIBC, Scotiabank and National Bank of Canada.
Why $250,000?
In 2025, the Department of Finance reviewed the existing limit and found that inflation had significantly eroded its real value. Officials determined that adjusting for inflation alone would require raising the cap to $150,000 just to maintain the same purchasing power as the 2005 limit.
However, the department also concluded that a limit of $250,000 per deposit category would align Canada with the United States and several Canadian provinces. Officials added that the higher figure may offer better protection for non-retail depositors as well.
Additional Reforms in Budget 2026
Beyond the cap increase, the federal government outlined several other proposed changes to the CDIC framework. First, it plans to legislate a mandatory review of the deposit insurance system every 10 years. The goal is to ensure the CDIC can access reliable data to support evidence-based policy decisions going forward.
In addition, the government proposes to provide temporary high-balance coverage for major life events, such as selling a home. Furthermore, the plan would remove the deposit insurance limit entirely for eligible deposits held in registered and tax-free accounts.
The proposed amendments also include a structural change for provincial trust and loan companies. Under the new rules, any such company seeking CDIC membership would first need to continue as a federal trust and loan company. According to the CDIC’s 2025 annual report, the corporation currently has 85 member institutions.
Together, these measures represent the most significant overhaul of Canada’s deposit insurance system in a generation. The government has yet to confirm a timeline for when the proposed legislation would take effect.
