with adecision tomake the system compulsory. TheCDIC subsequently formulated
draft amendments toprovisions in
theDeposit InsuranceAct
toenable the transition
to a compulsory deposit insurance system. The bill passed the third reading in the
Legislative Yuan and was promulgated by the President on January 20, 1999. On
February 1, 1999, the 57 financial institutions that legally accepteddeposits but did
not participate in thedeposit insurance system joined thedeposit insurance system,
becoming CDIC-insured institutions. The only exception was the Taipei Branch of
Germany’s Deutsche Bank, whichwas legally exempted fromparticipation as it was
coveredby thedeposit insurance system in itshome country.
The amended Act also relaxed limits on the CDIC's utilization of funds and
application for special financing, as well as strengthened the corporation's capacity
for resolution of problem institutions. The amendments also expanded themeans
by which the CDIC could fulfill its insurance responsibilities. Among these was the
provision of financial assistance to encourage other financial institutions to acquire
or assume failed institutions to achieve the purpose of maintaining an orderly
credit system and safeguard depositors. The changes also broadened the scope
andmethods of financial assistance. Assistancemeasures for insured institutions
under guidance, superintendence, and conservatorship, included providing loans
and deposits, while assistance to other insured institutions acquiring or assuming
insured institutionsunderguidance, superintendence, andconservatorship included
providing loans or placing deposits, providing financing, and guaranteeing debt.
The amended law also stipulated that the CDICmay, without increasing the costs
of payout,make advancepayment against claims tomeet the liquidity needs of the
creditorsof closed institutions.
In July 2001,
the
Deposit Insurance Act
was revised in conjunction with the
enactment of the
Statute for the Establishment andManagement of the Executive
Yuan’s Financial Restructuring Fund
(hereinafter referred to as the "Financial
Restructuring Fund Statute").Articles 7 and 21 were amended andArticle 17-1 was
appended to theAct, stipulating that the CDICmay be entrusted by the Executive
Yuan’s Financial Restructuring Fund (hereinafter referred to as the “Financial
Restructuring Fund”) to coordinate in handling claims against the liabilities and the
dispositionof assetsof insured institutions.
(2) Deposit Insurance
A. Strengthening Capital and Accelerating Reserve Accumulation to Strengthen
Reimbursement Ability
The CDIC was established with an initial capitalization of NT$2 billion. The
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ReviewandOutlook
