Legal Issues Deposit Insurance Corporation

Legislative bodies, regulatory authorities and banking institutions have been making untiring efforts in order to establish and maintain the depositors'confidence in bank in financial history, however, ensuring the security of the deposits made by depositors is always a major task for the whole banking industry. For the purpose of crisis cost control, financial regulatory authorities around globe continuously innovate and develop varies of systems, set up financial security nets to maintain financial stability. As an integral part of the financial security nets, explicit deposit insurance system has been widely recognized and implemented by policy makers. The collapse of financial institutions and such bankruptcy events happened in the transitional countries enable China to be aware of the importance and urgency of the establishment of deposit insurance institutions. It has been more than10years'research focusing on such matter, however, there are not only lots of problems needs to be solved, but also need to overcome the negative effects caused by the existing of deposit insurance institutions. The author strongly believes that it is necessary to establish a deposit insurance institution in China, which should combine with successful experience from foreign countries and China's national situation.This paper, which reviews the development process of the deposit insurance system, examines many factors that affect the design of deposit insurance institutions and bases on the previous work, tries to construct the framework to establish deposit insurance institutions by means of analysis, case studies and asking questions. The role deposit insurance institutions play is closely related to its ovv'n system design and the operating environment, so the analysis of Chinese economic environment, legal system and the stage of development in this paper has deeply theoretical and practical significance.This paper aims to study the legal framework of the establishment of deposit insurance institutions and relevant issues.Firstly, the author introduces the emergence and the development of the deposit insurance institutions, and tells readers the concept of it. Besides the basic introduction of the deposit insurance institution, the author elaborates the characteristics and significance of it, which lay the foundation for the deep study in the following parts of the paper.Secondly, even though there is plenty of disscussion in China about the legal nature, functional definition, orgnizational structure of the deposit insurance institutions in China, there is no consensus opinion on this issue. By comparison and analysis of the experience from foreign countries, this paper elaborates the choices which should be made by China.Thirdly, regarding the role deposit insurance institutions play in the financial security nets, the author has proposed a coordination system between them and other members in the nets, which contains three parts as follows:their respective areas of authority, information sharing and specific working mechanisms.Fourthly, the paper elaborates the conflicts between the establishment of the deposit insurance institutions and existing relevant systems and the solution for such conflicts in order to construct a set of legal system of deposit insurance institutions which is really practical in China.