Contagion effect is the key problem of the Banking Systemic Risk(BSR).

The development of financial globalization and financial derivatives are an unprecedented opportunity for the financial industry,but they are also an inducement for banking systemic risk.

By protecting depositor from the loss in the event of bank default, can deposit insurance lower bank system risk and enhance the stability of financial system? Or will it create moral hazardous incentives that increase the prabability of bankrupcy? This paper develops a simple model to analyze the relationship between deposit insurance and the risk of bank system, and their influential factors.

Different from most literatures’concerning about currency mismatch resulting in banks risk under national currency depreciation, this paper focuses on currency mismatch and banks liquidity risk under national currency appreciation.