Quora Answer: Does the FDIC Insure Deposits Held by Non-Americans?

The following is my answer to a Quora question: “Does the FDIC insure US deposits held by non-US citizens?”

The FDIC insures US deposits of non-American citizens.  Otherwise, there is no incentive for people to put their money in American banks, and that will cause a capital outflow.  The purpose of the FDIC is to give investors and depositors confidence in the American financial system.  As such, it must cover all deposits.

However, the FDIC does not insure deposits in the branches of American banks in other countries, since technically, they are no part of the American financial ecosystem.  This makes sense since they are underwriting risk in a country where they have no direct authority in the banking system.