Which term describes the body that provides insurance for deposits in member banks?

The correct answer is the Federal Deposit Insurance Corporation, often abbreviated as FDIC. This agency plays a crucial role in maintaining public confidence in the U.S. financial system by providing insurance for deposits made at member banks. It was established in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s.

The FDIC insures deposits up to a certain limit, which protects depositors' funds in the event of a bank failure. This insurance promotes stability within the banking system and encourages consumers to use banks, knowing their money is safeguarded. It also has the authority to examine and supervise financial institutions for safety and soundness, further ensuring the integrity of the banking system.

Understanding this concept is vital, as it emphasizes the importance of consumer protection in the banking industry and outlines the specific role of the FDIC in safeguarding individual deposits, which fosters trust in financial institutions.