The Chinese government announced on Tuesday that it will implement the long-awaited bank deposit insurance scheme in May, taking a key step in the country's financial reform.
中国政府周二宣布，将于5月执行期待已久的银行存款保险计划，向金融改革迈出重要一步。
From May, financial institutions will be required to pay insurance premiums into a fund that will be managed by an agency appointed by the State Council, according to a statement posted on the government website.
The scheme is designed to return bank clients' deposits if their bank suffers insolvency or bankruptcy. The reimbursement will be drawn from the new fund in the case of the deposit being 500,000 yuan (81,433 U.S. dollars) or less, which applies to 99.63 percent of Chinese depositors, said the statement.
Banks will pay indemnity with their own assets to those who have deposited more than 500,000 yuan.
A later statement quoted an unnamed official as saying, "The scheme will help build public confidence in the financial market, straighten the relationship between government and the market... and maintain financial stability."
Deposit insurance schemes are an important part of any financial safety net. The scheme has long been considered a precondition for China to free up deposit rates -- the last step in interest rate liberalization.
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