<p>This report studies the deposit insurance system that Korea established at the end of 1995 and has operated since then. Events during the Asian financial crisis of 1997 and the global financial crisis of 2007-2008 have demonstrated the importance of effective depositor protection schemes.</p>
<p>This report attempts to extract lessons and suggestions that would prove beneficial to policymakers in developing countries where the adoption of an explicit deposit insurance system is considered a way of either containing financial crises, or creating one of the important pillars of modern financial safety nets in the liberalized and globalized financial system.</p>
<p>It is an enormous challenge for developing countries to design and operate an efficient deposit insurance system. One of challenges is to strike an optimal balance between the benefits of preventing crises in advance, and the cost of controlling insured financial institutions and customer risk-taking</p>