Abstract: This paper compares account based Central Bank Digital Currency (CBDC) with deposit insurance (DI) in a moral hazard setting. The relevant agents’ utilities are the same in the two systems when either the deposit insurance fee is paid ex post or the deposit insurance fund (DIF) bears the risk-free interest rate. If the DIF’s return is lower than the risk-free rate, then CBDC yields higher welfare than DI. As in reality the DIF mainly invests in claims on the government, CBDC and DI can be regarded equivalent in practice. However, in old times of metallic standard the DIF could have invested primarily in non-interest bearing metal, which is in line with the fact that early central banks issued demand deposits to the non-bank private sector.