Abstract
My purpose in this paper is to analyze how market incentives could substitute for government regulation of banks in controlling risk. The present system for insuring bank deposits is unique in conjoining insurance with a highly detailed system of government regulation. In what follows, I briefly describe and explain the current system.1 Then I present the rationale for reforming the system by making a transition to private insurance of deposits. Finally, I suggest that privatizing deposit insurance might be only one part of a more general reform of the existing banking system.
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© 1988 The Casto Institute
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O’Driscoll, G.P. (1988). Deposit Insurance in Theory and Practice. In: England, C., Huertas, T. (eds) The Financial Services Revolution. Innovations in Financial Markets and Institutions, vol 1. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-3277-7_8
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DOI: https://doi.org/10.1007/978-94-009-3277-7_8
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-010-7971-6
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