Deposit Insurance

In banking, the term deposit insurance refers to insurance of bank account balances as part of depositor protection.

The term denotes a system of guarantees put in place by specialized insurance schemes. These systems are designed to ensure that depositors who invest in commercial banks by placing their base money into bank accounts in exchange for account balances (book money) receive at least part of their base money back in the event of a bank failure.

Examples of deposit insurance schemes include Esisuisse, which guarantees deposits in Swiss bank accounts, and the Federal Deposit Insurance Corporation (FDIC), which guarantees deposits held in U.S. bank accounts.

More on this topic:
What happens to your money when a bank fails?