To enhance the protection of small depositors and to assure the stability of financial system, CDIC (Taiwan) proposed to raise the deposit coverage from initially NT$ one million to 1.5 million and got the approval of the competent authority, Financial Supervisory Commission (FSC), in conjunction with the Ministry of Finance and the Central Bank. The enforcement date is effective from 1st July 2007.
The NT$ one million coverage had not been adjusted since 1987. During two decades, GDP per capita has doubled and CPI has increased over 45%, deteriorating the real value of the coverage amount. Moreover, concerning the coverage to GDP per capita ratio, compared with 2.3 times in US and Canada, 2.5 times in Japan, and 2.9 times in Korea, 1.9 times under the NT$ one million coverage in our country was comparatively low. The above-said situation indicated that the deposit coverage was not sufficient enough to protect the rights of small depositors, so CDIC had considered increasing the coverage amount. To avoid generating any moral hazard due to inadequately high coverage amount, CDIC (Taiwan) had conducted a public survey and consulted with experts and academics as well as took into consideration our country's macroeconomic situations and other well-developed deposit insurance countries' coverage ratio prior to setting the new coverage at NT$1.5 million. The new deposit coverage is around 2.9 times of the GDP per capita and the coverage ratio could increase over 90% in terms of deposit accounts and over 50% in terms of the total amount of the insurable deposits. The new coverage can also retain the market discipline from the big depositors.