Page 6 - CDIC Company Profile Ebook

Background of Establishment

Financial globalization Liberalization and internationalization

The trend toward the liberalization and internationalization of financial activity
worldwide has brought greater challenges and increasingly intense competition
to financial operations. In addition to enhancing the healthy operation of their
financial institutions by maintaining an environment of benevolent competition,
various countries have responded to these changes by placing the focus on the
establishment of deposit insurance systems to serve as a safety net for depositors
and using it to bolster confidence in the financial system so as to avoid the
occurrence of a chain reaction of bank runs and to maintain financial stability.

In view of the fact that the deposit insurance system is an important tool for
dealing with financial change, Taiwan began planning the structures needed for
such a system with the holding of a National Financial Conference in 1982, and
received the unanimous approval of the financial, governmental, and academic
sectors. The Ministry of Finance (MOF), together with the Central Bank of the
R.O.C. (Taiwan), then convened representatives of the financial industry to
formulate the Deposit Insurance Act, which was promulgated by the President and
implemented on January 9, 1985. The CDIC was established, pursuant to the Act,
on September 27 that same year as the sole institution in Taiwan charged
exclusively with the provision of deposit insurance.

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