On The Construction Of A Deposit Insurance Legal System For Rural Credit Cooperative

In the era of financial globalization, the questions of how to maintain the standardized operation of the financial system and how to prevent financial risks to guarantee national financial security have evolved into the shared concerns and also common difficulties of all countries in the world. The recent100years saw systematic, wide and far-reaching, banking crises in a large number of countries. To prevent flocks of clients from bank runs, many countries have established bank deposit insurance systems to instill the sense of security among their clients and relieve financial crisis as a whole. The deposit insurance system of the U.S. originated in the1930s, and understandably, the most time-honored and influential one is practiced by the U.S. Federal Reserve. For preventing and addressing financial risks in the setting as marked by the increasing openness in financial sector and escalating economic globalization, most countries in the world have adopted the deposit insurance system. The current international and domestic financial situations have borne out the RCC’s indispensability to the financial sector in a country, needless to say its very necessity of protecting depositors’ interests. It is known to all that RCC’s operation directly determines the validity of deposit insurance system which, if properly established, will be an instrument for improving the operation of rural cooperative financial institutions.Based on the above and the management state of the Nanchong RCC where I’m working in and an empirical research into main financial data on Nanchong-based RCCs and an analysis of the current situation of RCCs across China, this paper comes up with a rough conclusion that it is necessary and feasible to construct a Chinese deposit insurance system. Upon the summarization and exploration of the main problems through a probe into the System’s operational practices both at home and broad, the paper also presents the conception and design for Chinese RCC deposit insurance system in the hope of contributing a constructive scheme or its establishment and implementation. Apart from the preface and conclusion, the paper can be divided into three parts:Part Ⅰ:It is necessary to establish a deposit insurance system of Rural Credit Cooperatives, in consideration of maintaining a stable financial order, protecting all the middle as well as the small depositors’ benefit, easing financial risks of the government, promoting the sound development of RCCs and improving the market exit mechanism.Part Ⅱ:he feasibility of establishing a deposit insurance system of Rural Credit Cooperatives has been discussed, for instance, the reformation of Rural Credit Cooperatives should be improved systematically and the overall macroeconomy upturns; theoretical preparations and fundamentals of law gradually come to maturity.Part Ⅲ:The conception and design for Chinese RCC deposit insurance system has been presented, for instance, deposit insurance agency, deposit insurance fund, rate, the way and the range of compensation, and the way of being insured.The major originality of this paper lies in the conclusion that it is necessary and feasible to establish a deposit insurance system of Rural Credit Cooperatives and it is the right moment for its establishment. Based on the summary of existing research achievements scored by scholars at home and abroad, as well as the experience from the practices of establishment and implementation of deposit insurance system, this paper also gives some constructive ideas, for instance, insurance funds can be composed of three parts and can be transferred from deposit reserves; preferential tax cuts can be used to offset insurance funds.