China’s Deposit Insurance and Transformation of Banking Sector
Presenter: Lerong Lu (PhD Candidate, School of Law)
In recent decades, China has experienced rapid growth of economy since the launch of reform and open-up policy in the late 1970s. In contrast, its banking sector has remained relatively unchanged which has been dominated by a number of giant state-owned banks, particularly the Big Four that take up four positions in world’s top 10 banks in terms of asset value. They are widely criticised as low-efficient, and not in favour of the development of private businesses. However, China is now prepared to introduce the deposit insurance system (DIS) in 2015, which is a popular financial infrastructure and a vital element of financial safety net adopted by many countries, such as UK’s financial services compensation scheme, in order to protect savers from losses caused by bank runs. As a result, China’s DIS is said to have positive impacts on the further reform of banking sector. The presentation will mainly address three issues. First, the current situation of China’s banking industry will be introduced. Second, the latest draft version of Chinese DIS will be looked into. It will insure deposits of as much as 500,000 yuan (£53,358) per saver per account, and it will definitely be the largest scheme in the world, which covers more than 1.3 billion savers and deposits worth 112 trillion yuan (£11.95 trillion). Third, the speaker is going to examine how DIS will change the landscape of China’s banking sector. It is clear that it will allow some Chinese banks to fail in the future under a more market-oriented environment. Therefore, the new scheme, along with interest rate liberalisation and further opening up of banking sector, will contribute to a more competitive and efficient industry.
This is a free seminar open to all and lunch will be available. If you are planning on attending please e-mail Antony Butcher.
University of Leeds,
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