Your deposits and GICs are insured by the CDIC. Mutual Funds, including Money Market, are not.
There are banks in the US which recently devalued their money market funds because those funds held short term debt of institutions that defaulted.
Established wisdom is that savings accounts and GICs provide a guaranteed loss over time because they pay a lower return than the rate of inflation. If you pay tax on the interest, your loss is even greater. So, its likely that most people don't have most of their money in insured deposits or GICs.
Every other investment instrument has a degree of risk to it. This risk is quantified, balanced against the return, and factored into the price of the investment instrument. Unfortunately, a whole lot of risk calculations have turned out be wrong so a whole lot of people and companies have money sunk into instruments that are worth a lot less than they thought.
Companies holding devalued instruments are worth less, and in turn become bigger credit risks. They will have to pay more to borrow (if anyone will still lend them money) - so they will have less money to invest in their business, pay their employees, or pay their creditors.
And so it will spread....
Canadian banks and other corporations have $billions of exposure to American banks - both directly and indirectly. This will impact Canada.
The whole financial system depends on the ability to be mostly right when
calculating risk. If events repeatedly undermine those calculations, the system will seize up.
That's why we better hope the US Government will come through with all the cash needed (roughly equivalent to Canada's GDP) to restore some of the value that has been lost.