The Standing Committee on Economics approved a draft law on savings insurance on Tuesday.

Members said the draft would implement international standards to prevent a financial crisis and cut administrative costs. The draft covers three areas: lenders of last resort; financial supervision; and deposit insurance.

The first and second areas have been instituted in Mongolia but the third has not. Members said deposit insurance was important because it would reduce budget pressure, increase economic and financial stability, and reassure citizens.

There is a significant demand to implement a savings insurance program in Mongolia because the Government has already guaranteed bank deposits. That is why the draft law involves banks in the savings insurance program. A savings insurance fund would be established according to provisions in the draft law. The draft also lists the duties of banks, which would finance the fund through fees and taxes.