A premium for risk

摘要

Deposit insurance is normally intended to make bank failures less likely. It was first adopted in America during the Depression, when nearly half the country's 24,000 banks failed. Similar schemes, which aim to deter runs by indemnifying savers from losses up to a certain level if their bank goes bust, spread through Europe in the wake of financial crises from the 1970s on. The imminent launch of deposit insurance in China, however, inverts the usual logic. The Chinese financial system could hardly be more stable: it has been 16 years since a big bank failed. The aim is to shake things up-to add risk to a banking sector that has come to expect the government's help.