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Which one of the following is presently a major deterrent to bank panics in the United States? the fractional reserve system O deposit insurance O the gold standard the legal reserve requirement

Answer :

The correct option is A. Presently a major deterrent to bank panics in the United States is  the fractional reserve system.

Fractional reserve banking carries the possibility of bank panics, but these events are infrequent when banks are tightly regulated and make responsible loans. When depositors attempt to withdraw their money from the bank or convert their deposits into cash, a bank panic situation arises. Banks will need to have bigger reserves and commercial banks should constantly be maintained under regulation in order to avert this kind of collapse.

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