What does the FDIC (Federal Deposit Insurance Corporation) primarily do?

The Federal Deposit Insurance Corporation (FDIC) primarily serves to insure deposits made at member banks, providing a safety net for depositors in case of bank failures. This insurance helps to maintain public confidence in the banking system by protecting consumers' savings. The coverage includes various types of deposit accounts, such as savings accounts, checking accounts, and certificates of deposit, up to a certain limit per depositor, per insured bank.

The FDIC's role is crucial, particularly in times of economic uncertainty or banking crises, as it mitigates the risk faced by individuals and businesses when placing their money in banks. This function supports the stability of the financial system by preventing bank runs, where a large number of customers withdraw their deposits simultaneously, fearing the bank might collapse. The protective measures provided by the FDIC build trust between the public and financial institutions, thus playing an essential role in the overall health of the economy.