Partial deposit guarantee debated

It has been revealed that the government has been struggling with the question of whether to implement the partial deposit guarantee policy proposed earlier in the year to guarantee up to 20 million won for the depositors in financial institutions that become insolvent.

It also has been revealed that the government was looking into the possibility of increasing the amount guaranteed or delaying the implementation date of the policy should the economy turn for the worse, such as the extreme instability in the financial market.

The core of the partial deposit guarantee policy is that each person's deposit in financial institutions such as banks, other lending institutions and credit unions would be guaranteed up to 50 million won starting in January 2001. However, among the deposit programs at financial institutions, the foreign currency certificates of deposit, development trust funds, and the subscription deposit fund at secondary financial institutions are excluded.

Although the implementation date has been set for next year, the partial deposit guarantee policy is not a new one. It was first adopted in June 1996, but after the foreign currency crisis in November 1997 led to comprehensive (total) deposit guarantees, which still is in effect, to promote trust and foster the stability of the financial market.