Study Of The Deposit Insurance System

Deposit insurance, as one of the three main tools for the security net of a country'sfinancial system, is playing a vital role round the world. It is an insurance arrangement forprotecting interest of depositors and sustaining stability of financial system when financialinstitutions are not in a position to repay. Although it is important for many countries, itmay cause some problems such as moral risk and reverse choice at the same time.This thesis analyses the apparent deposit insurance systems in United States andJapan, and Chinese present dormant deposit insurance system after introducing thedefinition of deposit insurance system. Furthermore, the thesis stresses the necessity ofestablishing an apparent deposit insurance system in China.Based on the above analysis, the thesis puts forward the general principles andconcrete frameworks of how to establish a deposit insurance system in China.