Deposit Insurance
Also called: FSCS, deposit guarantee, insured deposits
Deposit insurance guarantees deposits up to a limit if a bank fails, which removes the rational basis for a run. It is the single most effective piece of financial stability regulation ever created — bank runs went from routine to rare after its introduction. Its cost is moral hazard: insured depositors have no reason to care how recklessly their bank lends, so supervision has to substitute for their diligence.