Research On Deposit Insurance System In China

With the acceleration of the globalization process, the extent and scope of themutual influence of the economic situation is growing, at the same time, the frequencyof occurrence of the recent financial crisis has changed the banking sector collapsephenomenon is more and more, to avoid the chain effect from banking sectorbankruptcy,the international common practice is to rely on the three pillars of thefinancial safety net to avoid, but in China there are two pillars,the deposit insurancesystem is not yet clear, only rely on the government’s implicit guarantee to fill, butwith the cost, increase the burden on the government and distort the central bank’smonetary policy. The person also studied from various aspects of the establishment ofdeposit insurance system in China, it is recommended to establish a deposit insurancesystem suitable for China. The author propose the necessity and feasibility ofestablishing deposit insurance system in the modern international practices byanalyzing the current economic situation in China, the implementation of thehierarchical limit deposit insurance system, and the establishment of the regulatory+the claim type deposit insurance institutions that is attached to the central bank, thespecific design and implementation of various elements by combined with China’snational conditions. Of course, the deposit insurance system is not a panacea, if designand operation is improper, it will not only lead to moral hazard and adverse selectionproblems, and will affect the financial safety net, limit the other two members’s role, soyou should pay attention to the synergy of the three, with a minimum of the cost of thethree to maximize the role of maintaining financial system stability. Also we note thatthe settlement of the order of arrangement of the debt of bank failures in theimplementation of the deposit insurance system, the relationship between insureddepository institutions and insured financial institutions, governments and thecommunity, pay attention to the interactions between them. I hope that theimplementation of deposit insurance is proposed by me is practical and feasibility.This article is divided into six main parts to prove. The first part describes thesignificance and research methods of writing this article. The second part describes thebasic theory of the deposit insurance system and analysis the phenomenon of bank runs.The third part explains China’s current economic situation and the necessity ofestablishing the deposit insurance system in China through the micro and macro levels, and the feasibility of establishing the deposit insurance system. through internal andexternal conditions. The fourth part introduce and compare the international practice,analyze the advantages and disadvantages, to draw the inspiration to establish depositinsurance system. The fifth part Introduce the China’s national conditions andeconomic development and have a specific designing on the establishment andimplementation of deposit insurance system. The sixth part explains that the depositinsurance system should be established in China to achieve the desired results, it shouldbe noted that the collaborative relationship with other aspects work together to buildChina’s financial development environment.