日批在线视频_内射毛片内射国产夫妻_亚洲三级小视频_在线观看亚洲大片短视频_女性向h片资源在线观看_亚洲最大网

US EUROPE AFRICA ASIA 中文
China / Society

Deposit insurance paves way for financial reform

By Zhou Feng (chinadaily.com.cn) Updated: 2014-12-02 17:38

The People's Bank of China, the central bank of the country, has started to solicit public opinions on the establishment of the system, a prelude to formal installation of this long-awaited deposit safeguard mechanism.

The central bank will cap insurance coverage at 500,000 ($81,000) for each depositor's saving at each bank. Such coverage will give full protection to 99.6 percent of the depositors in China.

China is not the first economy to have such a system to protect depositors. The United States established such a system during the Great Depression, while more than 100 other economies such as Canada, Germany and Hong Kong all followed the practice.

The system, which was born at the vortex of a financial crisis, aims to reduce information imbalance between banks and depositors, protect the latter and boost market confidence.

But China's decision to introduce such a system has more purposes. It is supposed to inject more risk and competition into the market to pave way for more financial reforms.

To understand this, it is needed to first review China's deposit protection practice.

Although China doesn't have a deposit insurance system, the government actually bailed out almost all insolvent financial institutes in the past decades. From 1998 to 2003, more than 300 financial institutes went bankruptcy. Their debts of 170 billion yuan, owed to individual depositors and investors, was repaid by governments. The practice leaves an impression to retail depositors that all their savings are 100 percent safe with the government believed to provide the final guarantee.

So, unlike developed economies, which go from no guarantee to limited guarantee or full guarantee, China actually goes from full guarantee to limited guarantee.

The government guarantee in China, an unwritten rule, is a legacy of the era of planned economy, when nearly all banks and other financial institutes were invested and controlled by the government.

Now that the government is working toward establishing the deposit insurance system, it means that the authority will let a market system to replace the government-insures-all model, a typical attempt to reduce government intervention with the market.

By asking the market to insure its banks, the government is injecting a little risk into the banking system.

The insurance system can be seen as a prelude for the establishment of private banks. As a prerequisite, private banks must be responsible for their decisions and operations. They shouldn't expect the government to bail them out in case of financial meltdown.

With this rule erected, China is paving the way for the establishment of private banks.

Similarly, the introduction of the deposit insurance system also conveys a message to state-controlled financial institutes: the government will not unlimitedly pay the bills for them.

In addition, the system heralds the removal of deposit floor, the last step of China's interest rate liberalization. China has long placed a floor deposit rate. Although the rate is allowed to be lifted by a certain range in recent reform measures, the floor has not been scrapped, which means banks are not allowed to decide deposit rates by themselves.

The controlled interest rate system has been a problem haunting China's financial system. It hinders the formation of market-orientated rates, creates an artificial interest rate gap for banks, reduces effects of monetary policies and weakens competition among financial institutes.

China has scrapped lending rates, but retains the deposit floor, mostly because of fears that banks will vie to increase deposit rates to attract depositors. In China, big state banks are not keen to increase deposit banks thanks to their large client base, but smaller city commercial banks and other financial institutes are eager to attract more deposits to boost their capital pools. A pursuit of deposits may come with large risk appetite, thus putting depositors' money and interest at risk. That explains why the government is reluctant to remove the deposit floor. It is afraid it will be dragged into unlimited responsibility of insuring all depositors.

Now that a clear deposit insurance system is to be set up, depositors' interest will be protect by the market rule instead of the previous unwritten government rule. With that guarantee in place, the time for scrapping the deposit floor is coming closer.

The author is a financial analyst in Shanghai.

Highlights
Hot Topics

...
主站蜘蛛池模板: 亚洲美女在线观看 | 亚洲欧美日韩免费 | 麻豆欧美 | 青青草手机在线 | 免费av中文字幕 | 最新av在线 | 手机天堂av| 成人天堂网 | 天堂成人网 | 亚洲最大成人av | 国产一区二区在线免费 | 亚洲丁香网 | 偷自在线| 欧美黄色大片免费观看 | 国产女主播喷水高潮网红在线 | 人人草在线 | 羞羞网站免费 | 午夜毛片在线 | 精品视频久久久 | 麻豆一区二区三区在线观看 | 91av在线免费 | 亚洲伦理在线 | 91插插插影库永久免费 | 九九热只有精品 | 最近中文字幕在线观看视频 | 成人在线网站 | 国产91精品一区二区 | 天天干天天干天天干 | 黄色欧美视频 | 欧美色视频在线观看 | 亚洲免费a | 国产97视频| 色综合久久久 | 日韩精品视频网站 | 久草精品视频在线观看 | 黄色在线观看国产 | 91精品欧美 | 五月香蕉网 | 中文字幕在线播放视频 | 裸体大乳女做爰69 | 少妇高潮露脸国语对白 |