The FDIC
the FDIC
FDIC - Federal Deposit Insurance Corporation
Answering "What steps can a bank take to deal with a significant outflow of deposits?"
FDIC
FDIC - Federal Deposit Insurance Corporation
Federal Deposit Insurance Co. (FDIC)
It differs from country to country. For ex: in USA FDIC insures all customer deposits. All deposits of upto USD 250,000 is insured/guaranteed by the FDIC. Similarly in India the RBI insures all deposits. All deposits of upto Rs. 1,00,000/- is insured by the RBI.
Customers deposits in a bank are the bank's liabilities because they are OWED to the customer.
In 1995, $2.7 trillion was held in American bank deposits
Commercial banks are guaranteed by the state not to fail because they take deposits from the customers. Investment banks have nothing to do with the individual customer. They don't take or lend deposit. they deal a lot in securities activities which is very risky business. You could win or lose a lot. Most or all commercial banks now have an investment banking arm or department which risks or endangers the deposits of customers if their deals go sour. If things go bad, the commercial bank is guaranteed by the state not to fail so they will pump money into that bank, i.e taxpayers money. This is all because the investment arm of this bank blew all the banks money in its risky bet. Therefore an investment bank should be separate from commercial.
Many believe that bank reform was the single New Deal program that was most helpful for getting out of the Great Depression.
A Bank GIC is a guaranteed Investment Certificate.