PBOC Said to Be Talking to Major Banks about Deposit Insurance

(Beijing) – The central bank has been consulting executives of major banks about creating a deposit insurance mechanism and may announce a draft plan early next year, a source close to the situation said.

Advocates have called for such a system for years, saying it is the cornerstone of further financial reform. Without it, they argue, the government will be held as hostage to banks who may act irresponsibly because they know the government will not let them fail and hurt tens of millions of depositors.