The Government will freeze all bank accounts in midwestern and northwestern commercial areas and will not allow bank accounts to be used to transfer funds abroad.
The announcement comes just weeks after the government imposed a 24 per cent levy on foreign banks, but is a reminder that it is not enough to get banks to change their ways.
The Government said the decision was based on the need to ensure banks have enough cash to pay staff on time and protect the taxpayer from bank run-ups.
But critics have said the move is only being made in response to bank runups.
The government said it would impose the new rules to help the banking sector.
The new rules include freezing all accounts in the three main commercial banks in the region, the National Commercial Bank of Midwestern (NCMB), the National Bank of Northwestern (NBN), and the National Community Bank of Central (NCBC).
The Government also said it will stop issuing new accounts.
The freeze will be applied across the three banks, with a one-off cap of $5 million per bank, or $2,000 for each of the three major banks.
The National Commercial bank of Midwest said it had not yet received the Government’s decision, but was considering the proposal.
“We are disappointed that the Government has taken a policy that will not protect us and our customers from any financial crisis, especially as this measure will result in significant cost to taxpayers,” the bank said in a statement.
“The decision does not come close to reflecting the reality of the commercial banking sector, which is facing serious challenges, including the potential closure of the banks.”
The NCMB is the largest commercial bank in the world and serves more than 40 million customers.
It was founded in 1900 by German-American immigrant Thomas Nelson and has branches in more than 100 countries.
The NNB is one of the largest banks in Canada and is part of the National Capital Region (NCR), which encompasses the city of Ottawa.
The NCR’s regional banking division, the NCC, was founded by the merger of Bank of Nova Scotia and the Halifax Regional Bank.
In an interview with the CBC, NCC chief executive officer Mike MacLellan said he believed the new measures would help the banks.
“I’m hopeful that this will help the NNC, because we are the only ones who have the money to meet our commitments,” he said.
“It’s going to be helpful to the NRC and to the NCR to have the cash flow to meet their obligations.”
MacLellant said the freeze would not affect the ability of the bank to pay its staff and the ability for it to open branches.
“That’s a matter of our business and that’s not the focus of this freeze,” he told CBC News.
“In terms of our ability to be able to service our customers and their needs, I’m not sure that we’ll be able.”
As we move forward we’re going to do everything in our power to make sure that our customers can do what they want to do and we’re not going to impede their ability to do that.
“The Bank of Canada said in February that it was also considering imposing a 24-per-cent levy on all Canadian banks.