The Deposit Insurance Act (DIA) of Japan (Act 34 of 1971)1, outlines the country’s deposit guarantee scheme approach and provisions of the Deposit I

Deposit Guarantee Scheme of Japan: DIA & DICJ

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2024-10-27 17:30:05

The Deposit Insurance Act (DIA) of Japan (Act 34 of 1971)1, outlines the country’s deposit guarantee scheme approach and provisions of the Deposit Insurance Corporation of Japan (DICJ). This article analyzes Japan’s deposit guarantee scheme as outlined in the DIA, with a particular focus on the structure, financing, and operations of the DICJ. By examining the DICJ’s role, funding mechanisms, triggering processes, and historical interventions, this text aims to explain how the deposit guarantee scheme is structured & functions in Japan, as well as how it compares to the European Union’s approach.

The DIA defines the DICJ as a legal entity whose goal is to protect depositors, maintain an orderly credit and financial systems2. The law establishes the DICJ as a corporation3, with its operations supervised by the Prime Minister and the Minister of Finance4, making it a public entity. It is governed by a Policy Board consisting of a Governor, Deputy Governors, and up to eight additional members5. The Governor, who represents the DICJ and presides over its operations, is appointed by the Prime Minister with the consent of both Houses of the Diet (the Japanese parliament)6.

Deposit Insurance Operations: The DICJ is responsible for the deposit insurance system, which includes collecting insurance premiums from financial institutions7 and paying out insured deposits in the event of financial institution failure.