What is the role of the FDIC?

The Federal Deposit Insurance Corporation (FDIC) plays a vital role in safeguarding the banking system and maintaining public confidence in it. Its primary function is to insure deposits at banks and savings associations, which protects depositors by covering their accounts up to a specified limit, typically up to $250,000 per depositor per insured bank. This insurance helps prevent bank runs, where a large number of customers withdraw their deposits simultaneously due to fears of bank insolvency. By ensuring that account holders will not lose their money in the event of a bank failure, the FDIC contributes to the stability of the financial system as a whole.

The other choices involve roles not associated with the FDIC, such as issuing securities, which is typically done by governmental agencies or corporations, monitoring stock market performance, usually the domain of regulatory bodies like the SEC, and providing loans to small businesses, which is generally the function of financial institutions rather than a deposit insurance entity.