China announced that they will insure bank deposits starting on May first of this year. They plan on insuring all deposits, up to 500,000 renminbi or $81,000. With these limits the program would cover roughly 99.6% of all Chinese savers. This program would help bolster consumer confidence and increase consumption by increasing the protections for savers.
In 1998, China conducted one of the biggest bank bailouts in history. This led to investors and consumers believing that the government would always bailout banks, no matter their lending patterns. Experts believe that this thought process would die slowly. Many people, despite deposit insurance, would look towards the government when a bank failed.
To pay for this program, banks would have to pay a deposit. These deposits would be set up on a variety of factors. These would include: “economic and financial developments, deposit structures and the risk management status of each institution.” Finally, this program will hopefully allow the government to loosen deposit regulations that have been stringently controlled by the central government for institutions. This, according to the article, could raise deposit rates by 1% and shift income towards depositors and finally consumption.
Source paraphrased throughout: http://www.nytimes.com/2015/04/01/business/international/china-introducing-program-to-insure-bank-deposits.html?ref=topics&_r=0