20-3 Protecting FI insurance funds in the event of an FI failure is the responsibility of taxpayers.

Question

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Protecting FI insurance funds in the event of an FI failure is typically the responsibility of the deposit insurance fund or similar organizations, which are funded by the member institutions and not taxpayers directly. However, in exceptional cases, government intervention and taxpayer money may be used to protect depositors in the event of a systemic crisis.

20-3 Protecting FI Insurance Funds in the Event of an FI