Serve as a Key Link to...

...LOCAL CREDIT UNIONS

The middle tier of the national credit union system consists of eight provincial Central credit unions and one federation of caisses populaires. Together they provide a vital link to provincial governments and national co-operative organizations.

The major shareholders and depositors in Centrals are local credit unions. Other types of co-operatives may also be secondary shareholders. Centrals’ boards of directors are composed of directors and general managers from local credit unions elected on a regional or an at-large basis.

Centrals are funded through the purchase of shares shareholder deposits of surplus funds dues earnings on loans and investments.

...PROVIDING FINANCIAL SUPPORT FOR THE SYSTEM

The principal financial role of Centrals is to maintain system liquidity at the provincial level.

Credit Union Central of Canada is responsible for overseeing national liquidity for the Canadian credit union system. It has contracted with Credit Union Central of British Columbia to perform this important function. By agreement, each provincial Central holds 2 percent of the aggregate assets of local credit unions which are affiliated with it in a segregated fund under the control of a custodian. In addition, another 4 percent must be made available for liquidity purposes and invested in qualifying assets, although not in a segregated fund. Combined operating liquidity must total 6 percent.

At the end of 1998, combined operating liquidity held by provincial Centrals was approximately $5.9 billion, or 11.9 percent of system assets.

The liquidity pool is designed to cover normal cyclical requirements and unexpected economic circumstances that may impact generally on Canadian financial institutions.

Additional financial services provided by Centrals may include:

• access to the Canadian payments system (including cheque clearing)
• fund transfers between credit unions
• regular updating of financial information
• asset/liability management.

...SUPPORT ON-GOING MEMBER SERVICES

While specific programs and services vary somewhat from province to province, Centrals provide member credit unions with a wide range of on-going support services that may include:

Marketing & Communications

• Marketing, including the development of new products and services
• Communication between credit unions to foster better links
• Advertising and promotion
• Public Relations, to promote the benefits and features of credit unions
• Research
• Education
• Member education, through brochures, kits, videotapes and seminars
• Professional development programs for directors, managers and credit union personnel

Systems

• Electronic data processing
• Systems, manuals and state-of-the-art technology designed to facilitate day-to-day operations

Professional Management Services

• Management counselling
• Legal & Taxation services

... REPRESENT CREDIT UNIONS BEFORE PROVINCIAL GOVERNMENTS

Centrals link credit unions and provincial governments by acting in such capacities as:

• negotiating on behalf of their members/credit unions
• advising government policy makers and administrators regarding the application or amendment of regulatory statutes
• representing credit union interests when proposed provincial legislation could impact on the affairs of credit union operations

... PROVIDE A SYSTEM THAT WORKS

All Centrals are regulated provincially. In addition, all Centrals with the exception of the Centrals of New Brunswick and Prince Edward Island are regulated federally, under the Cooperative Credit Associations Act. Federally regulated provincial Centrals and Credit Union Central of Canada are inspected by the Office of the Superintendent of Financial Institutions.

In each province, a stabilization fund and/or deposit insurance and guarantee corporation protects the deposits of credit union members. In concert with provincial government regulators, these corporations ensure that credit unions are among the soundest of the country’s financial institutions.

Most credit union deposit protection organizations have powers beyond the collection of premiums and the payout of funds. Most, in fact, give priority to stabilization and prevention roles aimed at averting the potential payout of claims.