Deposit insurance: what lies ahead?

Proposals to redesign deposit insurance may be neglecting the market’s role, says Manoj Singh

FDIC
Matthew G. Bisanz/Wikimedia/bit.ly/4183C5s

Uncertainty, which we may personally perceive as a friction, is one of the potent forces in financial markets. Seen through an optimistic lens, markets best know how to tackle uncertainty through risk-return dynamics. Whether the transfer of risks through hedging or designing of an insurance product for adverse situations, the balancing mechanism of markets keeps everything in order. 

However, as the recent experiences in the US have shown, even a well-structured mechanism of deposit insurance

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