Banks will also be subject to frequent new entry, exit, and mergers and acquisitions, under the strict governance of shareholders and depositors. We cannot return to the period of high economic growth where, de facto, there were no bank failures.
In this sense, the removal of blanket deposit insurance may represent the last hurdle for banks to overcome before they enter the next stage of competition. In doing so, it is desirable that banks be perceived as having passed over the hurdle on their own, not under the government’s initiative as in the past.