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Fred Lum/The Globe and Mail

There is a lot of chatter among the gold bug crowd that investors should rush out and increase their stash of the yellow metal on their way to buying more canned food, guns, and ammo, lest they suffer a bank deposit haircut like the one being applied in Cyprus.

While there may be some risk of a worst-case scenario playing out in weak and small euro zone countries, depositors in Canada and the U.S. probably have nothing to worry about. There's no need to swap all the fiat currency in our wallets and the electronic entries in our bank accounts for real money that jingles.

The reason we can be so sanguine? The numbers just don't add up for such a drastic attack on depositors occurring, short of some kind of economic cataclysm.

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Capital Economics chief U.S. economist Paul Ashworth did some number crunching in a recent report to clients, outlining pretty convincingly that deposit haircuts at U.S. banks are extremely unlikely, and in an interview he said much the same thing applies at Canadian banks.

For one thing, the banking sector in North America is far smaller than in Cyprus. Bank assets in the U.S. equal only 93 per cent of GDP, compared to a figure of more than 700 per cent for Cyprus. With that kind of high number, the government in Cyprus couldn't rescue banks, without destroying its own credit worthiness.

Two additional pluses: U.S. banks have recently been stress tested and have topped up their capital ratios.

"All things considered, it is extremely unlikely that depositors at U.S. banks would ever suffer losses in the event of a bank failure," he noted. "Guarantees would be honoured, not the least to prevent runs on other banks."

In Canada, domestic banks are better run than their U.S. counterparts and have an important solvency backstop in the form of Canada Mortgage and Housing Corp. insuring riskier mortgage loans.

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