| China is about to establish deposit insurance system. How to define the legal system of deposit insurance directly affects its pattern and the perfection of Chinese banks supervision and market withdraw system. This paper is entitled "The Basic Functions of the Legal System of Deposit Insurance". Taking China's actual conditions as the basis and learning from the experience of developed countries, the writer analyses the functions of deposit insurance system, using comparative and inductive methods. This paper aims to study the two basic functions of deposit insurance system: risk precaution and risk disposal, so as to give personal advice on the choice of Chinese deposit insurance system's functions and offer a tentative idea in the layers, procedures and methods of establishing deposit insurance system , possessing the two basic functions. This paper also analyses the relationship between the system and the financial safety net as well as other members.This paper is divided into three chapters in addition to introduction and conclusion.The first chapter summarizes deposit insurance system's two basic functions: risk precaution and risk disposal through the analysis of the functions of deposit insurance system in America, Germany, Japan and Taiwan province. Based on the analysis of the factors which affect the choice of deposit insurance system's functions and the advantages and disadvantages of the choices made by different countries, this chapter gives suggestion on China's establishing deposit insurance system, that is to centre the reinforcement and perfection of the system and to strengthen two basic functions of deposit insurance system.The second chapter elaborates deposit insurance system's two basic functions and their economic and legal basis. If we compare deposit insurance system with the last accommodator system and cautious supervision system, we can see deposit insurance system is the bridge between them and the perfection of Chinese financial safety net. The three systems work as the complement of each other, together establishing Chinese financial safety net.The third chapter analyses the choice of risk precaution and risk disposal, Chinese deposit insurance system's two basic functions. Based on China's actual conditions, this chapter analyses the necessity and feasibility for China to choose the deposit insurance system, possessing the two basic functions. Moreover, this chapter offers advices on specific measures to carry out the two basic functions of Chinese deposit insurance system, examine the insurance bank's qualification and safeguard the risk precaution function at first place. In order to prevent risk in advance and avoid banks' moral risk, the deposit insurance departments should supervise the operation of insurance banks, using both on-the-spots and off -the-spot methods. Necessary legal punishment can effectively ensure the risk precaution function and can safeguard the effects of deposit insurance system through denying the insurance and issuing prohibition. It is a must to make the criterion for banks involved in problems and finish handling it quickly and effectively at the lowest cost in order to prevent the risk from further spreading, provided that the market's stability is guaranteed. The following part of his chapter discusses the coordination and cooperation between deposit insurance system and other members in the financial safety net. The writer believes that their duties should be stipulated by law and their cooperative system on exchanging ideas should be strengthened. They together promote Chinese financial development in a healthy and orderly way. In the end, the environment for carrying out the law should be perfected so as to ensure the effectiveness of deposit insurance system. |
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