Explanation: Risk-based deposit insurance is insurance with premiums that reflect how prudently banks act when investing their customers' deposits. The idea is that flat-rate deposit insurance shelters banks from their true level of risk-taking and encourages poor decision-making and moral hazard.
Easy way to remember, (my music teacher taught me this in fifth grade) <u>E</u>very <u>G</u>ood <u>B</u>oy <u>D</u>oes <u>F</u>ine. Bottom line E, the line above that would be G, the next up is B, then D, and then F.
