The case for deposit insurance

Deposit insurance is considered to be a highly important mechanism to prevent bank runs and to boost depositor confidence. China is the only major economy in the world that has yet to introduce deposit insurance legislation after 111 countries and regions have already done so.

With the marketization of financial fields in China, establishing an explicit deposit insurance plan must be seriously considered by the central government.

For a long time, an implicit deposit insurance policy has existed based on governmental credit guarantees provided via the People's Bank of China, the country's central bank.