Question
Here is the question : WHAT DOES THE FDIC FEDERALLY INSURE?
Option
Here is the option for the question :
- Devaluation
- Domestic product
- Demand
- Deposits
The Answer:
And, the answer for the the question is :
Explanation:
Banking systems work because people have faith they can get their money out of the bank when they need it. A bank, however, does not retain mountains of cash in safe deposit boxes. Instead, banks reinvest their customers’ funds in new customers and new enterprises. However, a bank run happens when clients withdraw their money out of worry for the institution’s stability after trust has been broken. The Federal Deposit Insurance Corporation (FDIC) covers deposits up to $250,000 per customer to assist avoid this.
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the federal government that provides insurance to protect depositors in case their bank fails. Specifically, the FDIC federally insures deposits held at FDIC-insured banks up to a certain dollar amount per depositor, per insured bank.
Deposits that are insured by the FDIC include checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs). The FDIC does not insure other types of financial products, such as stocks, bonds, mutual funds, or annuities.
The FDIC was created in 1933 in response to the widespread bank failures of the Great Depression. The goal of the FDIC is to provide stability and confidence in the banking system, by assuring depositors that their money is safe even if their bank fails.
Currently, the FDIC insures deposits up to $250,000 per depositor, per insured bank. This means that if a depositor has multiple accounts at the same bank, such as a checking account and a savings account, each account is separately insured up to $250,000. If a depositor has accounts at multiple FDIC-insured banks, each account is insured up to $250,000 at each bank.
The FDIC is funded by premiums paid by FDIC-insured banks. Banks are required to pay premiums based on their deposits and the level of risk associated with their operations. The FDIC also has the authority to borrow money from the U.S. Treasury if necessary to meet its obligations.
In the event that a bank fails, the FDIC takes over the bank’s operations and works to resolve the bank’s outstanding debts and obligations. The FDIC may also sell the failed bank to another institution. If the FDIC is unable to find a buyer for the failed bank, it may liquidate the bank’s assets and use the proceeds to pay depositors up to the insured amount.
the FDIC plays a critical role in maintaining stability and confidence in the banking system. By federally insuring deposits, the FDIC helps to protect depositors from the risks associated with bank failures, and ensures that the financial system remains strong and stable.