This paper consists of two parts. Part I discusses the Canadian experience with moral hazard and deposit insurance. It takes a look at the benefits and costs of deposit insurance and the future policy issues in Canada with regard to the safety net and deposit insurance. Part II analyses the Canada Deposit Insurance Corporation's Differential Premium System, including the system design and development, as well as the qualitative criteria and factors to review member institutions. Lastly, the paper also includes as an appendix, the other available approaches in developing a differential premium system.