Question

Many policymakers in developing countries have proposed implementing systems of deposit insurance like the one that exists in the United States.​ However, replicating the financial system from one nation may not be successful in other nations due to different​ economies, politics,​ histories, etc. Deposit insurance is designed to _______ (decrease / increase) fears of bank runs and therefore _______ (decrease / increase) confidence in banks and deposit.

Answer 1

Decrease; increase

Step-by-step explanation:

the blank will be filled with Decrease; increase respectively.

Deposit insurance will decrease fear of bank run and therefore increase confidence in banks and deposit.

Replicating the financial system from one nation may not be successful for that country because every country's economy is different.

Politics also plays a very important role in the economy because if the nation is economic stable them confidence in the bank system also increases. So, replicating the financial system from another country is not the solution.