Mr. Brian Corr:

That issue was not in the terms of reference of the group and relates more to our work on future challenges. The issue of liquidity was not raised in the CUAC report so we did not make any recommendations in that regard. The background is that credit unions currently have a lot of cash and investments which can be quickly accessed, such as Government bonds and deposit accounts, so liquidity is not a particularly significant issue for credit unions currently. They are essentially over-liquid and that is one of the problems as they have been putting money into low-yielding investments. However, if credit unions become more involved in complex products and longer-term mortgage products which are not as liquid as their current investments, we may need to consider how credit unions would maintain liquidity. Very few credit unions have a significant number of loans outstanding relative to assets, so it is not currently an issue.

Under legislation, a credit union can borrow a small amount of money from another credit union and a credit union can lend a small amount of money to another credit union. That is allowed in law but I suspect one of my colleagues here will say that the percentages are too low. They are not needed at the moment so therefore have not been looked at urgently although there is that facility.

Many credit unions, in order to ensure their liquidity, make sure they have available facilities from banks but they get charged for that. There is a cost to making sure that liquidity is in place.

That is the background from my perspective as chair of the group. This is a particular issue for Mr. Johnson.