What is the primary purpose of the Federal Deposit Insurance Corporation (FDIC)?

The primary purpose of the Federal Deposit Insurance Corporation (FDIC) is to insure the deposits of banks and savings associations. This means that when individuals deposit money into these financial institutions, their funds are protected up to a certain limit, currently $250,000 per depositor, per insured bank. This insurance provides a safety net that enhances public confidence in the banking system, ensuring that depositors do not lose their money in the event of a bank failure. By safeguarding personal and business deposits, the FDIC plays a crucial role in maintaining stability and trust in the financial sector.

The other choices, while related to financial institutions, do not accurately reflect the FDIC's core mission. For instance, providing loans to banks is not within the FDIC's role; that function is typically carried out by institutions like the Federal Reserve or other lending facilities. Similarly, regulating interest rates and managing monetary policy falls under the purview of the Federal Reserve System, not the FDIC. Therefore, the correct answer highlights the essential function of protecting depositors' funds, which is central to the FDIC's establishment and ongoing operations.