the implementation of blanket guarantees. In Taiwan, the government announced onOctober
7, 2008 that it would implement blanket guarantees for deposits at insured institution (banks
and community financial institutions) to the end of 2009. Themeasure sought to stabilize the
financial system, strengthen depositor confidence and the health of financial institutions, as well
as promote the healthy and sustainable development of financial markets. To further stabilize
financial markets, the government extended coverage to foreign currency deposits, interbank
deposits and interbank call loans, which were previously excluded from the deposit insurance
system, and strengthened financial supervisionof relatedbusinesses. Theblanket guaranteewas
subsequently extended to the endof 2010 in viewof theoverall financial situation inTaiwan, the
need of some financial institutions for more time to adjust and improve their deposit structure,
and the expiration times of blanket guarantee programs in neighboring countries. This policy
fullyachieved theeffectsof stabilizing the financial order and reinforcingdepositor confidence.
B. Collecting a Special Insurance Premium for NTDollar Interbank Call Loans
In conjunctionwith the implementationof blanket guarantees, insured institutionswere required,
fromNovember to December 31, 2010, to pay a special monthly insurance premium on NTD
interbank call loans, as stipulated by the “Measures to Support Blanket Guarantee of All Bank
Deposits” promulgated jointly by the FSC, theMOF, and theCentral Bank. The special premium,
theCDIC’s first,was aimedat preventingmoral hazard.
C. StrengtheningMoral HazardPreventionduring theBlanket Guarantee Period
Toavoidmoral hazardduring theblanket guaranteeperiod, theFSCand theCentral Bank closely
watched for abnormalities in interbank call loans by financial institutions. To further ensure the
sound operation of financial institutions, the government strengthened financial supervision,
regulation of debt structuremanagement at financial institution, and implementation of prompt
corrective action to enable the prompt resolution of problem financial institutions and reduce
resolution costs.
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ReviewandOutlook
