How was the federal deposit insurance coporation meant to prevent another depression?

The Federal Deposit Insurance Corporation (FDIC) was established in 1933 to restore public confidence in the banking system after the devastating bank failures during the Great Depression. By insuring deposits up to a certain limit, the FDIC aimed to protect depositors' savings, thereby reducing the likelihood of bank runs. This safety net encouraged individuals to keep their money in banks, stabilizing the financial system and promoting economic recovery. Ultimately, the FDIC’s role was crucial in preventing the panic and instability that contributed to the economic downturn.