institutions, BankersAssociation and relevant competent authorities, requested and
received approval from theMOF to increase rates for the three grades to 0.05%,
0.055% and 0.06%, effective from January 1, 2000. Thiswas an importantmilestone
as the first adjustment to thedifferential premium rate.
(3) StrengtheningOff-siteMonitoringMechanisms
The FSCwas established in July 2004 to promote a policy of integrated financial
supervision. It was placed in charge of the examination of financial holding
companies, banks, insurers, securities and bills finance companies nationwide. The
CDIC’s financial examination tasks and 143 examiners were transferred to the FSC.
The CDIC’s Department of Bank Examination was also dissolved after fulfilling the
taskof financial examination formany years.
Indevelopingdeposit insurance functions, theCDIChasnot limited itself toapassivepay-
box role. Ithasalsoservedasanenthusiastic risk-minimizer,adopting regularandongoing
riskcontrolmeasures todetectpotential risksat insured institutionsearlyand intervene in
a timelymanner tomaximize thebenefitsofdeposit insurance inprotectingdepositorsand
stabilizing the financialorder.Believing that“prevention isbetter thancure,” theCDICbegan
in the1990s to successivelydevelopand implement anumberof off-siteearlywarning
monitoringmechanisms.Thesemechanismshavedulyserved theirearlywarning function
and, inconjunctionwithon-site inspectionsof businessand financial affairsby theCDIC
personnel,haveenabled theCDIC topromptlydetectoperational problemsat insured
institutions and seizeopportunities tohandle theseproblems.
A. Strengthening theNational Financial Early-Warning System
In June 1999, the CDIC comprehensively reviewed the National Financial Early-
Warning System (NFEWS) (including the Financial Examination Rating System and
Call Report PercentileRankingSystem) enacted inJuly1993 to fully reflect theactual
operating conditions of financial institutions. Empirical evidence gained over the
years has confirmed the ability of this system to reflect the business performance
of financial institutions and fully develop the proper supervisory functions. The
main purpose of the system is to regularly compile early-warningmanagement
statements to provide to the relevant competent authorities to enhance exchanges
of supervisory information and the efficacy of financial supervision; to regularly
publish information on the financial affairs and related indicators of community
financial institutions nationwide in the Deposit Insurance Quarterly Bulletin and
on the CDICwebsite to strengthenmarket supervisory powers; to request insured
institutions to improve operations when abnormal operations are detected or,
26
Central Deposit Insurance Corporation 30Years inRetrospect
