By Wu Yiyao (
China Daily)
10:37, July 02, 2013
China may introduce deposit insurance plans by the end of this year after extensive discussions over the past few years, Wu Xiaoling, a member of the National People's Congress Standing Committee and former vice-governor of the People's Bank of China, said on Monday during a conference in Shanghai.
The central bank has listed the deposit insurance plan as one of the key reform goals for 2013, Wu noted during a conference concerning the protection of consumers' rights for financial services and products at the China Europe International Business School.
Once the deposit insurance system is adopted, it will provide a safety net for consumers' savings in banks, helping to enhance financial market stability and reduce systemic risks, said a central bank circular in May at the height of the liquidity squeeze in the banking system.
Wu did not elaborate on the insurance coverage limit but said the insurance represents "progress" in protection for both individual and institutional depositors.
Ling Tao, deputy director of the central bank's Shanghai branch, said last Tuesday in Shanghai that the central bank had reached a consensus with the departments whose efforts will be needed to set up the deposit insurance system.
According to analysts at UBS Securities, the insurance coverage limit may range between 200,000 yuan ($32,606) and 300,000 yuan, while Barclays researchers forecast it at 200,000 yuan to 500,000 yuan.
"There have been some banks in China that failed during the past few years. Without a deposit insurance system, individual depositors could get their deposits back with the help of implicit guarantees, while institutions did not," said Wu.
Outstanding bank deposits exceeded 100 trillion yuan in May, according to the central bank.
Extensive discussions over the deposit insurance system have taken some two decades and cleared several obstacles, according to a central bank circular in June. The State Council initially proposed the deposit insurance system in 1993.
The central bank currently allows banks to set loan and deposit rates based on official benchmark rates, which creates greater competition and squeezes bank profits.
"Smaller banks may face greater risk than State-owned ones as interest rates get increasingly liberalized amid intensive competition and higher non-performing loan records," said Jimmy Leung, banking and capital markets leading partner of PricewaterhouseCoopers China.
According to Barclays Research, the deposit insurance system that might be implemented by the end of 2013 may dent banks' net profits up to 1.91 percent in 2014.
Some experts said implementation of deposit insurance could increase moral hazard because lenders might take more, not fewer, risks.
"When an implicit guarantee turns to be an explicit guarantee while the incentives for lenders are not designed properly, more risks may be entailed," said Qiao Yide, general secretary of the Shanghai Development Research Fund.
We Recommend:
Chinese investors' happiness and sadness Top 10 luxury villas of China in 2013 Soft gold -- gambiered Guangdong silk China's 1st intelligent high-speed train tested Glamorous models pose at Shenyang auto show Top 10 cities where home prices are set to soar High-end singles party attracts swarm of girls Beijing's taxicabs in 30 years 12th Int'l Automobile Industry Expo kicks off Email|
Print|
Comments(Editor:ChenLidan、Gao Yinan)
Increases the bookmark
twitterfacebookSina MicroblogdiggGoogleDeliciousbuzzfriendfeedLinkedindiigoredditstumbleuponQzoneQQ MicroblogRelated Reading
China central bank ready to unveil deposit insuranceDeposit insurance policy to be released soonTime to launch deposit insurance, economists sayFinal touches for deposit insuranceHot NewsTokyo warned not to resort to 'empty talk'Abe's 'values diplomacy' goes against the grainRare frogs saved from smugglers in S ChinaE China downpour affects 666,000 people Fears of financial crisis downplayed after squeeze policyEconomist: Chinese people's incomes may hit $12,000 Top 10 most dangerous roads in the worldChina's Li Na wins against Roberta Vinci of Italy at Wimbledon
本站仅提供存储服务,所有内容均由用户发布,如发现有害或侵权内容,请
点击举报。