The insured depositor transfer method of failure resolution

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The insured depositor transfer method of failure resolution involves transferring the insured deposits of the failed bank to another solvent bank, usually a competitor. This method minimizes the deposit insurer's out-of-pocket costs because it does not involve paying off depositors immediately, unlike other methods such as liquidation or merger. It also keeps the failed bank operating for a short period of time until the transfer is completed. Insured depositors do not bear any losses, as their deposits are protected by deposit insurance.

The Insured Depositor Transfer Method of Failure Resolution