Deposit insurance a 'solution for failing banks'

The deposit insurance system that is set to start on May 1 will offer a market-based solution for banks that fail in an increasingly complex business environment, said economists and bankers.

Several shockwaves of change hit the traditional banks last year: accelerated interest rate liberalization, a boom in Internet finance and the long-anticipated entry of private-sector banks.

With these pressures have come risks for banks that cannot be ignored, said Zhou Jingtong, a senior analyst with Bank of China Ltd's International Finance Institute.