Study On The Deposit Insurance System With Chinese Characteristics

The deposit insurance is based on the theories of fragility of banking industry and financial intermediation. Limitations of centre bank's lender of last resort function in modern world increase the needs of constructing deposit insurance system.China faces the reform of financial general adoption of the market principle now. It makes the implicit deposit insurance system doesn't fit for the development of economy. China must construct deposit insurance system with Chinese characteristics by the requirement of particular conditions. Particularity of Chinese depositors requires deposit insurance system to ensure the deposit of low level incomer safe; the reform of Chinese banking industry's shareholding system requires implicit deposit insurance transfers to explicit deposit insurance system; differences of asset of Chinese banks requires accreditation system; and particularity of Chinese banking regulation requires deposit insurance funding diversify its sources to prevent deposit insurance institution loses independence; official employ basic structure can prevent centre bank or ministry of finance controls deposit insurance institution.This article writes a lot on constructing Chinese deposit insurance institution, insurance coverage and membership of Chinese deposit insurance, fund sources, premium of insurance, compensation methods, management of fund, handling of failed banks.The construction and implement of deposit insurance would raise many problems, for example, the risk of moral hazard, adverse selection. These problems will affect success or failure of Chinese deposit insurance system. At the end of this article, I provide solutions of problems that mentioned above to ensure Chinese deposit insurance system will operate smoothly.