Deposit insurance was introduced to stop bank runs: if depositors know their funds are guaranteed, they have no reason to rush to withdraw at the first rumor of trouble, and the self-fulfilling panic that can topple even a solvent bank is forestalled. Critics counter that the guarantee carries a hidden cost. Ordinarily, depositors who stand to lose their money have an incentive to monitor a bank and to demand higher interest from one that lends recklessly; this market discipline restrains risk-taking. Insurance removes that incentive—an insured depositor is indifferent to the bank's lending choices—so, the critics argue, banks face a weaker external check and may take on more risk than they otherwise would, a classic moral hazard. Defenders of insurance do not deny the incentive in the abstract; they contend that its practical force depends on the regulatory environment in which insurance operates. Where supervisors impose capital requirements that force shareholders to keep substantial wealth at stake, and where premiums are scaled to a bank's riskiness, the bank's own owners bear the downside of reckless lending, which restores much of the discipline that insured depositors no longer supply. The disagreement, then, is less about whether the depositor-monitoring channel is muted—both sides grant that it is—than about whether other mechanisms can be made to substitute for it. An empirical claim is embedded in the defenders' position: that the strength of these substitute checks, not the mere presence of insurance, determines whether risk-taking actually rises.