China will introduce a deposit insurance system to protect depositors and promote fair competition among large and small banks, the central bank announced on its website on Sunday.

 

The People's Bank of China said it is soliciting public opinions on the draft rule and expects to establish the system in six months or a year.

 

Here are some basics about the deposit insurance system we are expecting.

 

What is the deposit insurance?

 

Under the system, the government will insure deposits of as much as 500,000 yuan ($81,367) per saver at each bank covered.

 

In exchange, banks may pay premium based on their operating and risk management conditions. According to the central bank, the premium in general will account for only 0.5 percent of the banks' operating costs.

 

Currently, more than 110 countries and regions offer deposit protection, which plays an important role in preventing and alleviating financial risks as well as maintaining financial stability.

 

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