What is the main role of the FDIC?

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The main role of the FDIC, or the Federal Deposit Insurance Corporation, is to insure deposits at banks. This means that when individuals deposit money in banks that are FDIC-insured, their deposits are protected up to the insured limit, which provides a safety net and builds trust in the banking system. This insurance is crucial as it helps prevent bank runs, where large numbers of customers withdraw their deposits simultaneously due to fears over the bank's solvency.

This insurance coverage promotes consumer confidence in the reliability of banks and encourages savings and stability within the financial system. By ensuring depositor's funds, the FDIC plays a fundamental role in maintaining public confidence in the U.S. financial system and safeguarding individual deposits from loss in the event of a bank failure.

While the FDIC does not regulate interest rates, provide loans to small businesses, or facilitate international banking, its primary focus on deposit insurance is critical for the overall health and functionality of the banking industry.

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