Category Archives: Guaranteed Asset Protection Insurance

【Abstract】 In the past 20 years, a series of successive outbreaks of the world’s financial crisis in global financial market has brought about new opportunities and challenges. the stability of the financial system impacts not only the country’s economic development but also the country’s economic security and financial sovereignty. Deposit insurance system, as a financial security system, together with the banking supervision, as well as the last resort of central bank, are considered as three pillars of the financial safety net. the deposit insurance system, which has experienced many financial crises in the test, has been proven to be an effective crisis management approach, so that an increasing number of countries have begun to study the establishment of, or improve the existing deposit insurance system. In China, with the deepening financial system reform, the establishment of deposit insurance system has become a major concern as both theoretical and practical issues.Deposit insurance system means that when the deposit-taking financial institutions are unable to pay debt, in order to protect the legitimate rights and interests of creditors, maintain the stability of the financial system, a system is arranged inspiring by the forms of organization as the insurance system. the process is: based on the pay premiums by the commercial banks, once the insured institutions (e.g. banks) facing a crisis or bankrupt, it will be taken up by this insurance agency as a deposit to pay a certain limit deposits. the role of deposit insurance system is to protect the interests of small depositors, the insolvency of financial institutions to build a market exit mechanism, thus to enhance people’s confidence in the country’s financial system and maintain the stability of financial system. the Chinese government has always been to provide implicit deposit protection to the banking sector, the state actually assumed full responsibility for deposit insurance. China is the world’s yet to be implemented explicit deposit insurance system in countries GDP volume and the total assets of the financial system’s largest country. After the Asian financial crisis in 1997, the Chinese Central Bank had set up a special research team to study about deposit insurance system issues. At present, the state authorities are conducting preparatory work on the deposit insurance system and the legislative institution establishment.the implementation of any system is the pros and cons, so is the deposit insurance system. It is playing an active role, will inevitably bring about moral hazard, adverse selection and other issues. Moral hazard is the key to the success of effective implementation for deposit insurance system. if we can not clearly recognize the shortcomings and risks it implies in the design of a deposit insurance system, and explore a set of these defects that can effectively circumvent the system improvement program, combined with the actual design in line with China’s national conditions of deposit insurance system, then, rush to introduce a deposit insurance system not only can not play the role of stabilizing the financial system, but also the opposite may aggravate the financial system instability.To promote and guide the establishment and perfection of national deposit insurance system, the World Bank, International Monetary Fund, Bank for International Settlements Financial Stability Forum and the International Association of Deposit Insurance, together with other international organizations and foreign experts and scholars, have studied the deposit insurance system and come up with a solid theoretical foundation of the national characteristics of the deposit insurance system, deposit insurance system in the operation of experiences and lessons learned from research, providing many general principles and recommendations.This thesis introduces the deposit insurance system, the emergence and development, and analysis of the deposit insurance system to establish the theoretical foundation for the establishment of deposit insurance based on game- analysis system, the reference in developed countries and emerging market economies (regions) establishing the maturity of the deposit insurance system experience, with reference to international organizations on the establishment of explicit deposit insurance system, norms and guidelines, and finally propose the establishment of explicit deposit insurance system in China’s financial system, as well as the basic framework.