Brent Furtney, Director, Ontario Government Relations, Canadian Credit Union Association
While it’s absolutely not the case everywhere, there still are some Ontario municipalities where credit unions are ineligible to provide letters of credit in support of a municipal agreement. It’s not a practice that makes a lot of sense in 2026, particularly when doing so risks delaying or denying housing or other beneficial community projects.
Municipalities have an obligation to protect their financial interests. That means only accepting security from well-regulated, well-capitalized Canadian-based financial institutions. That makes sense. But thinking that requirement should exclude credit unions doesn’t.
Ontario credit unions operate within a rigorous regulatory framework that ensures they maintain capital, liquidity and financial stability. According to Ontario’s Financial Services Regulatory Authority, in the first quarter of this year, credit unions reported a regulatory capital to risk-weighted assets ratio of nearly 14%. Ontario credit unions reported about $7.22 of equity and capital for every $100 of assets, compared with a 5.94% average for the big five banks.
The dependability of credit unions matters, because as local institutions, credit unions pride themselves on working with local partners to back important community projects. When development dollars are in short supply, an outdated approach to letters of credit is a very real headwind against getting things done.