On March 12, 1933, in his first fireside chat, U.S. President Franklin D. Roosevelt said, “there is an element in the readjustment of our financial system more important than currency, more important than gold, and that is the confidence of the people.” As FDR understood over eight decades ago, safeguarding the public’s confidence is one of the basic requirements for financial stability. Banking systems ultimately rely on the public’s willingness to deposit their hard-earned money in banks. As exporters across the globe experience reduced revenues and as the European Union’s financial troubles continue, governments are growing worried that confidence levels in their banking systems will deteriorate. This would have not only immediate financial consequences, but could also have far-reaching geopolitical implications as the ability of governments to manage growing crises diminishes.
Deposit insurance is at the core of government efforts to maintain public confidence in ban