A detailed study is needed before China adopts a proposed bank insurance scheme, according to analysts and bank officials.
A report this week suggested that Beijing was looking at adopting a deposit insurance scheme - similar to the one formally approved in Hong Kong yesterday - in a bid to improve depositor confidence in a system that was technically insolvent.
HSBC Greater China chief economist George Leung Siu-kei said Beijing shelved a similar plan about two years ago with the People's Bank of China, arguing it was not necessary.
'Firstly, all state banks in China are indirectly guaranteed by the central government, so there is no such thing as a banking failure. Therefore, no cover is required,' Mr Leung said.
'Second, for the handful of private banks outside the mainstream banking system, the key issues are whether to extend cover not just to private banks but also to the collapsing credit co-operatives which are in huge numbers.
'The scheme will not be feasible if it is extended to the co-operatives because of the huge amount of funds involved.'
