Why is Federal Deposit Insurance Corporation so important?

Answer 1

The Federal Deposit Insurance Corporation (FDIC) is crucial because it protects depositors by insuring deposits in member banks, up to a limit of $250,000 per depositor per bank. This insurance helps maintain public confidence in the banking system, especially during economic downturns. By preventing bank runs, the FDIC promotes stability in the financial system and encourages individuals to save, knowing their funds are secure. Additionally, the FDIC oversees and regulates banks to ensure sound practices and protect consumer interests.