Banking Glossaries-C

Canada Deposit Insurance Corporation (CDIC)

A crown corporation that provides deposit insurance against the loss of deposits made with member financial institutions.

Canada Education Savings Grant

Program recently introduced by the federal government whereby it will invest, in the form of grants, along-side parents who save for their children's education through RESPs. The government will top up contributions made to an RESP by 20% up to a yearly maximum of $400 per beneficiary.

Canada Savings Bonds (CSBs)

A secure way for Canadians to save. The bonds, which are a form of debt issued by the Canadian government, are cashable, with proper identification, at any time at most Canadian financial institutions.

Canadian Bankers Association (CBA)

Professional industry association that provides information, research, advocacy, education and operational support services primarily to the banking industry.

Canadian Depository for Securities Limited (CDS)

Agency responsible for the automatic processing and clearing of all securities transactions in Canada.

Canadian Payments Association (CPA)

This association, which is composed of several financial institutions and the Bank of Canada, operates a national clearing system for financial institution payments.

Capital Adequacy Ratio

A ratio of total capital divided by risk-weighted assets and risk-weighted off-balance sheet items. A bank is expected to meet a minimum capital ratio of 8.0% unless a higher ratio has been specifically prescribed by the Superintendent of Financial Institutions.

Capital Gain or Loss

The difference between the price you paid for an investment and the price at which you sell (in other words, the profit or loss you make). Investments that earn capital gains or losses include equity and growth funds.

Capital investments

Money used to purchase permanent fixed assets for a business, such as machinery, land or buildings as opposed to day-to-day operating expenses.

Cash flow forecast

An estimate of when and how much money will be received and paid out of a business. It usually records cash flow on a month-by-month basis for a period of two years.

Chartered Banks

Financial institutions regulated under the Bank Act. Chartered banks are designated as Schedule I, Schedule II or III depending on their ownership.

Cheque

A written order from a financial institution for payment of a certain amount of money.

Cheque book

A book with blank cheques. The cheques may be personalized or non-personalized.

Cheque register

A book with space for you to note the details of every transaction in your chequing or combination account.

Clearing and Settlement

The process whereby banks collect or pay out for items drawn on or paid into accounts in their institution. This process enables banks to accept each other's cheques and bank drafts for deposit. The Canadian Payments Association operates Canada's clearing system.

Co-Branded Card

An alliance between a card issuer and a large non-deposit taking corporation which offers discounts/rewards to cardholders for using the card which bears the corporation's name.

Collateral

Property (real, personal or otherwise) pledged as security for a loan. Also, any supplementary promise of payment, such as a guarantee.

Combination account

An account that is part savings and part chequing. You may write cheques and you will be paid interest if you have enough money in the account.

Commercial Banking

Commercial banking centres serve small- and medium-sized businesses such as franchising, leasing and cash management services.

Compounding

Refers to earning income on your income. For example, on fixed income investments that pay interest over time at periodic intervals, compounding means making interest on your initial investment and also on the interest as it builds up (i.e., earning interest on your interest).

Consumer Price Index

An index that measures movements in the average price of products and services typically consumed by Canadian families.

Contribution

An amount of money you put into a savings/investment plan.

Corporate Banking

Banking services for large firms.

Correspondent Bank

In a country where a bank does not have offices, it will often make arrangements with another bank to act as its agent in that country. The correspondent bank carries out financial transactions, such as making payments on behalf of the first bank in the foreign country.

Credit Cards

Credit cards such as Visa and MasterCard allow the holder to charge purchases rather than pay cash. Generally, no interest is charged as long as the monthly statement is paid in full by the due date.

Credit Risk

The risk of loss one assumes under a financial contract that a borrower or a counterparty to a loan or other credit-related contract may default or fail to perform its obligations.

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