Some countries have concluded that, because depositors rightly perceive that banks will still fail and therefore  BIS Review 60/2001  3  depositors might run from solvent banks, deposit insurance is necessary to prevent runs.
However, given the focus of deposit insurance on small deposits, and the extent of wholesale (uninsured) deposits in many banks today, deposit insurance is now often justified on the grounds it makes it politically acceptable to fail banks which should be failed and to limit the extent of taxpayer liability to insured deposits only. The contemporary case for bank regulation runs something like this.