The original purpose of deposit insurance was to
A) prevent bank runs by large depositors.
B) increase the regulatory monitoring of banks.
C) force the banks to invest in less risky investments.
D) prevent bank panics by insuring the small deposits of many people.
E) All of the above.

Question

Quizplus · Accepted Answer

The original purpose of deposit insurance was to prevent bank panics by insuring the small deposits of many people. This was implemented after a series of bank panics during the Great Depression, which resulted in the loss of many people's life savings. By providing deposit insurance, the government aimed to restore confidence in the banking system and prevent future bank panics. The other options listed were not the primary purpose of deposit insurance.

The Original Purpose of Deposit Insurance Was to