China struggles to rein in moral hazard in banking.

This is an automatically generated TL;DR, original reduced by 85%.

As outlined by China's cabinet Tuesday, company and individual deposits of up to 500,000 yuan per bank will be insured by a fund run by the People's Bank of China that will cover over 99% of depositors.

"In fact, the word 'implicit guarantee' has been widely used in almost all investment products in China, including the risky shadow banking trust products," OCBC Bank wrote in a research report.

With deposit insurance in place, analysts say, China can move on introducing a bank bankruptcy law, granting charters to more private banks, freeing up interest rates and liberalizing capital markets.

Extended Summary | FAQ | Theory | Feedback | Top five keywords: bank#1 China#2 risk#3 implicit#4 guarantee#5

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