A planned insurance fund for China’s trust industry will have an initial size of around 40 billion yuan ($6.47 billion), the state-owned China Securities Journal reported on Saturday, citing unidentified officials from the banking regulator.

The fund, the first of its kind, will mark the capstone of Beijing’s long campaign to insure all of China’s financial industries, reducing risk in the country’s shadow banking sector while preparing the way to allow more defaults and bankruptcies.

The China Banking and Regulatory Commission (CBRC) on Friday published rules governing the management of the planned insurance fund, but did not say when the fund would be set up.

Under rules, which come into effect immediately, each firm in China’s $2.1 trillion trust industry is required to contribute 1 percent of their net assets to the fund, while each trust product will pay 1 percent of the money raised.

According to an unidentified CBRC executive, the fund will have an initial size of about 40 billion yuan and continue to grow every year, the China Securities Journal reported.

When the insurance scheme matures, the regulators will also set different contribution rates depending on the risk profile of the trust firms, the paper said.

China has established similar funds for securities, insurance and commodity futures companies. It is also preparing to set up its first deposit insurance fund to protect bank customers.

Unlike the other insurance programs, the trust firms will not use the funds to compensate investors in the case of bankruptcies. Instead, they will be used in the liquidation and restructuring of companies that received trust investment.

“The trust insurance fund will only be the last resort to help rescue trust companies instead of conducting compensation payments,” a CBRC spokesman was quoted in a statement as saying.

“Assuming the role of a ‘security network’ for the industry, the fund will effectively separate risk in industry from the government … and help digest the risk of individual trusts within the sector.”

The rules also listed five situations in which the fund will help bail out individual firms. These include when a trust is declared bankrupt, is short of capital to support its operations or is ordered to close for irregularities.

Assets under management at China’s 68 trust firms rose to 12.95 trillion yuan by the end of the third quarter this year, making trusts the single biggest financial sector after commercial banks, official data shows. ($1 = 6.1864 Chinese yuan renminbi) (Reporting by Lu Jianxin and Pete Sweeney; Editing by Simon Cameron-Moore)