What is more serious is if the depositor cannot receive compensation of their loss rapidly, they will not only distrust the deposit insurer, but also doubt the performance of the whole financial system which is harmful to the financial stability. And then, the expense of process of compensation and the interruption of the normal financial market order should be diminished. At the same time, for the purpose of providing the maximum protection of the depositor, the coverage of the insurance should be expanded largely and the regulation of the staffs of the system should be strengthened as well. Moreover, the depositor ought to have the right to acquire the information about their funds and the actions of the financial institutions. Only these elements are fulfilled, the resolution process can be deemed as an effective procedure.       

The Financial Crisis

Clearly, before the recent financial crisis, the financial system did not work as it should be. It did not anticipate this financial tragedy in time. Because of the subprime mortgage crisis of America, a great deal of multinational financial enterprises such as Lehman Brother and the traditional banking like Washington Mutual Savings Bank had suffered a collapse. There were no distinct signals can warn the financial regulators and investors that the financial market was experiencing problems and probably would be damaged. In addition, the recent financial crisis had not been managed well. In terms of the highly globalisation of the financial market, this American financial plight spreads to all over the world and it becomes to the worst global financial crisis as well. Hence many depositors suffered heavy losses in the crisis. Due to the lack of a suitable and worldwide financial stability policy, it is extremely hard for different jurisdictions to cooperate with each other to protect the depositor’s interest.