CHINA / Chinadaily.com.cn Exclusive
China mulls deposit insurance system
By Dong Zhixin (chinadaily.com.cn)
Updated: 2007-07-23 11:02
A pedestrian walks past a branch of China Construction Bank in Shanghai
June 3, 2007. [newsphoto]
China's central bank is considering establishing a deposit insurance
system in a bid to promote financial stability, news reports said on
Monday.
The People's Bank of China (PBoC) aims to push forward legislation on
deposit insurance, the Xinhua News Agency reported, citing information
from a central bank meeting.
PBoC has carried out research looking into this matter, according to the
report.
Deposit insurance is a measure introduced by policy makers to protect
deposits, in full or in part, in the event of banks being unable to pay
deposits. The insurance can maintain public confidence in the financial
system and prevent bank runs, thus helping promote financial stability.
The United States was the first country to establish an official deposit
insurance scheme, during the Great Depression in 1934. Currently, nearly
100 countries have such an arrangement in place.
The lack of deposit insurance in China is related to the fact that most
of the banks in the country are State-owned, which offer confidence to
depositors, analysts said.
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