Explicit Deposit Insurance System In China's Implementation Of The Feasibility Analysis

Explicit deposit insurance system is an important part of a country's financial safety net. It plays an important role in protecting the interests of depositors and the financial system's security. Therefore, in recent years, more and more countries have established explicit deposit insurance system. China has also set up the system into the agenda. However, explicit deposit insurance system is also a double-edged sword. Besides the function of maintaining financial stability, it also brings a range of issues such as moral hazard and so on. These problems, if not tackled properly, will bring a country's financial system a great negative impact. Therefore, the analysis of feasibility of the explicit deposit insurance in China is particularly important.In this paper, we analysis several conditions that are required by explicit deposit insurance system from three aspects, that is the theoretical basis, the mechanism design and the effect of operation. Based on these conditions, the paper relates the conditions to the situation of our country and carries out a detailed analysis. Finally, the paper comes to the conclusion: 1.In the short term, China does not have the necessary condition to implement explicit deposit insurance system, which means explicit deposit insurance system is currently not feasible; 2. In the long run, China should actively create conditions to establish a sound and efficient explicit deposit insurance system as soon as possible. In addition, the paper put forward a number of policy recommendations based on the conditions.The paper is divided into six chapters. Chapter I is a brief introduction which introduces the currently research in this article, the meanings and difficult issues in this research. Chapter II analyses the theoretical basis of the explicit deposit insurance system and sums up several conditions which are used to analysis the actual situation of China. Chapter III analyses the mechanism of the deposit insurance system design. Chapter IV analyses the operating effect. Chapter V comes to the conclusion of feasibility. Chapter VI gives the policy suggestions.