Group 1 - The banking industry in China is experiencing two major trends: declining deposit interest rates and an increasing number of bank bankruptcies and dissolutions [1] - The current three-year deposit interest rate for state-owned banks has dropped below 2%, compared to over 3% in the past [1] - In 2024 alone, 195 small and medium-sized banks have announced their dissolution [1] Group 2 - Industry experts advise withdrawing three types of deposits starting May 1 to avoid potential losses: structured deposits, high-interest deposits, and deposits in banks not participating in deposit insurance [4] - Structured deposits involve using a portion of the depositor's funds to invest in high-risk assets like stocks and bonds, which can lead to higher returns but also carry significant risks [6] - If structured deposits fail, while the principal is protected, interest earnings may be reduced or lost, and early withdrawal could result in additional losses [6] Group 3 - Many small and medium-sized banks are offering deposit rates significantly higher than the market average to attract customers, with rates often exceeding 2.85% [8] - These banks invest the deposits into high-yield projects, which come with high risks; failure in these investments could lead to liquidity issues and threaten the safety of depositor funds [8] Group 4 - A significant number of small banks are not participating in deposit insurance, which protects deposits up to 500,000 yuan; currently, over 600 small banks lack this insurance [11] - Depositors are advised to check for deposit insurance indicators before placing funds in banks, as those without insurance pose a risk of significant losses in case of bankruptcy [11]

Core Viewpoint - The article emphasizes the need to strengthen the deposit insurance system in China through market-oriented, legal, and professional risk management measures, building on the achievements of the past decade [1][3]. Group 1: Historical Context and Current Status - Since the implementation of the Deposit Insurance Regulations in 2015, the People's Bank of China has effectively managed the deposit insurance system, which has operated smoothly [1]. - The establishment of the Deposit Insurance Fund Management Company in May 2019 has enhanced the collection of premiums, risk monitoring, early correction, and prevention of bank runs [1]. - Internationally, deposit insurance systems have been established in nearly 150 countries, with 56% of these being legislated and managed by governments [2]. Group 2: Recommendations for Improvement - It is recommended to expedite the enactment of a deposit insurance law to provide a legal foundation for the system to function effectively as a financial safety net [1][3]. - The article suggests expanding the accumulation of the deposit insurance fund and enhancing the resources available for financial risk management [4][5]. Group 3: Financing Mechanisms - Various methods to strengthen the deposit insurance fund's financing mechanisms are proposed, including borrowing from the central bank, issuing bonds, investment operations, and pre-collecting premiums [6][7]. - The experience of Japan highlights the importance of having a robust backup financing mechanism to ensure liquidity during crises [6]. Group 4: Risk Management Functions - The current deposit insurance system has limitations in its risk management functions, such as inadequate information sharing and insufficient early corrective measures [8]. - The article advocates for enriching the risk management functions of deposit insurance, drawing lessons from Japan's experience in enhancing the role of deposit insurance in financial risk management [9][10]. Group 5: Future Directions - The article calls for the establishment of a comprehensive risk management framework that includes various tools for handling financial institution crises, such as takeovers, bridge institutions, and rapid compensation for depositors [10][11]. - It emphasizes the need for deposit insurance to play a central role in risk management, ensuring a collaborative approach with regulatory bodies and the central bank to create a more robust financial safety net [11].

Core Viewpoint - The establishment and implementation of the deposit insurance system in China over the past decade have significantly contributed to financial stability, with a focus on risk prevention, early correction, and effective risk disposal [1][8]. Group 1: Implementation and Management - Since 2015, the People's Bank of China has established a dedicated account for the deposit insurance fund, ensuring its safety through separate management [2]. - The deposit insurance system has provided full protection for over 99% of depositors with a compensation limit of 500,000 yuan [2][5]. - The system has enhanced public confidence in the banking sector, particularly benefiting small and medium-sized banks [2]. Group 2: Risk Management and Early Correction - The deposit insurance system adopts a "risk minimization" model, allowing for participation in the entire process of risk prevention, resolution, and disposal [3][4]. - Since 2016, the fee rate mechanism has transitioned to a risk-differentiated fee rate, promoting prudent management among institutions [3]. - The system has successfully prompted over 600 institutions to take corrective measures to mitigate risks [3]. Group 3: Professional Risk Disposal - The deposit insurance fund has been involved in risk disposal since 2019, successfully managing cases such as Baoshang Bank [3][5]. - The approach of "takeover + acquisition + bankruptcy liquidation" has been effectively implemented, ensuring depositor rights and maintaining market discipline [5]. - The system's design allows for a balance between protecting depositor rights and preventing moral hazard [5]. Group 4: Future Directions - There is a need to elevate the legislative status of the deposit insurance system to match its role as a pillar of the financial safety net [6]. - Future efforts will focus on expanding the accumulation of the deposit insurance fund and enhancing backup financing mechanisms [7]. - The financial stability bureau will continue to implement the deposit insurance functions and maintain systemic financial risk prevention [8].