One intention of deposit insurance is to reduce the danger of

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Deposit insurance is intended to reduce the danger of bank runs, which occur when depositors rush to withdraw their money from a bank due to concerns about the bank's solvency or ability to meet its obligations. By insuring deposits, the government can help restore depositor confidence and prevent such runs from occurring. While deposit insurance may indirectly contribute to reducing excess lending or risky lending, its primary purpose is to prevent bank runs. Excess profits are not necessarily a danger that deposit insurance seeks to address.

One Intention of Deposit Insurance Is to Reduce the Danger