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The FDIC recommended increasing the insured deposit limit for businesses

The proposal by the Federal Deposit Insurance Corporation will generate financial stability and protection for depositors

The FDIC recommended increasing the insured deposit limit for businesses
Time to Read 2 Min

In a report released Monday, the Federal Deposit Insurance Corporation (FDIC) recommended raising the insured deposit limit for businesses, which currently covers $250,000.

The initiative arises after the recent bankruptcy of First Republic Bank which was acquired by JPMorgan Chase. The bank runs by Silicon Valley Bank and Signature Bank in the first week of March generated strong uncertainties in the banking sector, causing depositors to withdraw their money from the entities.

For Martin J. Gruenberg, Chairman of the FDIC, “the recent bankruptcies of Silicon Valley Bank and Signature Bank, and the decision to approve Systemic Risk Exceptions to protect uninsured depositors in those institutions raised fundamental questions about the role of deposit insurance in the banking system of the United States,” he said.

The change proposed by the FDIC seeks to make the coverage of the highest deposits even more flexible. Therefore, by increasing the deposit insurance limit for companies, it would prevent companies from running the risk of financial instability at the time of a bank run.

During the failure of Silicon Valley Bank, more than 94% of national deposits were not insured, for Signature Bank the figure reached 90% and First Republic Bank, which was recently seized, more than 67% of deposits were not insured either.

This news has been tken from authentic news syndicates and agencies and only the wordings has been changed keeping the menaing intact. We have not done personal research yet and do not guarantee the complete genuinity and request you to verify from other sources too.

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