Under the deposit insurance system, financial institutions pay insurance premiums to the Deposit Insurance Corporation of Japan (DICJ) and the DICJ protects depositors by such measures as making a certain amount of insurance payout, thereby maintaining the stability of the financial system in the event of a failure of a financial institution1.
After the bubble economy collapsed, the number of failed financial institutions increased, so from FY1996, a temporary measure was taken to protect deposits, etc. in full. The DICJ provided financial assistance (monetary grants) totaling just under 19 trillion yen to cope with the repeated failure of financial institutions (within insurance payout cost: 7.5 trillion yen (paid from the General Account); exceeding insurance payout cost: 11.4 trillion yen)2.
At that time, the deposit insurance premium rate which had remained at 0.012% from FY19863 was raised to 0.048% from FY1996. Between FY1996 and FY2001, a special insurance premium (premium rate: 0.036%) was introduced. After the special insurance premium was abolished, the deposit insurance premium rate (effective rate) remained unchanged from 0.084%4.
Under these conditions, 1) regarding the Special Operations Account from which financial assistance in excess of the insurance payout cost was provided (this account was closed at the end of FY2002), special insurance premium revenues amounted to 1.2 trillion yen only, and thus government spending in excess of 10 trillion yen was made5; and 2) as for the general account, the retained loss exceeded 4 trillion yen6 at its peak (at the end of FY2002) and persisted for a long time thereafter.
At the end of FY2010, the retained loss of the deposit insurance fund (liability reserve) was eliminated for the first time in 15 years, and the liability reserve amounted to approximately 0.1 trillion yen (137.3 billion yen). At present, the liability reserve as of the end of FY2011 is estimated to be approximately 0.4 trillion yen.
Under these circumstances, the Study Group on Deposit Insurance Premium Rates has discussed such issues as the desirable deposit insurance premium rates and liability reserve in future from the medium- and long-term perspectives, and summarized the discussions as follows.