# Deposit Insurance

*Banking & Payments — Finicade finance glossary*

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.

**Also known as:** FSCS, deposit guarantee, insured deposits

**Related terms:** [FDIC](https://finicade.com/glossary/fdic), [Bank Run](https://finicade.com/glossary/bank-run), [Moral Hazard](https://finicade.com/glossary/moral-hazard), [Commercial Bank](https://finicade.com/glossary/commercial-bank), [Systemic Risk](https://finicade.com/glossary/systemic-risk)

Source: https://finicade.com/glossary/deposit-insurance