THE ECONOMICS OF MONEY,BANKING, AND FINANCIAL MARKETS 308

276 PA R T I I I Financial Institutions account) The Qu bec Deposit Insurance Board (QDIB) insures deposits for Qu bec TMLs on terms similar to the CDIC s Trust and mortgage loan companies are funded almost entirely by chequable and nonchequable savings deposits, term deposits, guaranteed investment certificates, and debentures; together, they account for about 85% of the balance sheet Their risk asset portfolio is made up mostly by residential mortgages and personal loans; together they account for about 60% of assets The low-risk assets are largely in short-term paper and Canadian bonds Cooperative Banks: Credit Unions and Caisses Populaires Cooperative banks are small lending institutions organized around a particular group of individuals with a common bond (union members or employees of a particular firm) Alphonse Desjardins formed Canada s first cooperative bank in 1900 in Qu bec, and it was based on the cooperative movements in Europe, which, among other things, stressed the provision of credit to the little man Today, there are two cooperative financial systems in Canada: the caisses populaires system in Qu bec and the credit union system in other parts of the country There are about 1000 credit unions and caisses populaires in Canada, with almost 10 million members and more than 60 000 employees, carrying on retail financial services businesses Because their members share a common goal, credit unions and caisses populaires are typically quite small; most are about the size of a single bank branch and hold less than $10 million of assets, with the largest being VanCity Savings with assets close to $6 billion The credit unions and caisses populaires are established under provincial legislation and are non profit-seeking financial institutions Unlike chartered banks that accept deposits from and lend funds to the general public, the cooperative banks accept deposits from and lend funds only to their members Members have voting rights and elect a board of directors, which determines the union s lending and investment policies As member-owned, independent financial firms, credit unions and caisses populaires constitute an alternative financial system, different from the profit-seeking banking system They have also developed their own set of institutions, including central banking and deposit insurance arrangements In particular, each province has a central credit union, owned by the member credit unions, that provides financial services to individual credit unions All central credit unions outside Qu bec are members of the Credit Union Central of Canada (CUCC), also known as Canadian Central The Canadian Central serves as the third tier for the credit union movement; it coordinates various functions and provides cheque-clearing services for all provincial central credit unions In Qu bec, caisses populaires are assembled under a single federation, the F d ration des caisses Desjardins du Qu bec, which has a similar structure to the provincial central credit unions in the rest of Canada but with considerably broader regulatory responsibilities The federation dominates retail and corporate financial intermediation in Qu bec It owns a major P&C insurance group, Desjardins General Insurance; a life and health insurance company, Desjardins Financial Security; a venture capital firm, Desjardins Venture Capital; and an investment dealer and discount brokerage, Desjardins Securities and Disnat It also owns Caisse centrale Desjardins, which functions as a central bank, as the CUCC does for the rest of Canada Credit unions and caisses populaires are not directly covered by the CDIC However, each provincial government has an agency, commonly called a stabilization fund, which has a line of credit with the provincial treasury and provides deposit guarantees for credit unions Deposits in New Brunswick and Prince Edward Island are insured up to $60 000 per account, in Ontario and British