Quiz 2 for 1085

Agreements such as the ________ are attempts to standardize international banking regulations.

• UN Bank Accord

• Basel Accord

• GATT Accord

• WTO Accord

• IMF Accord

The Basel Accord, an international agreement, requires banks to hold capital based on

• risk-weighted assets

• the total value of assets.

• liabilities

• Deposits

• Loans

Regulators adopt Basel rules in order to avoid _____

• Investment risk

• Market risk

• Systematic risk

• Unsystematic risk

• Liquidity risk

The Financial safety net encompasses two main features

• Deposit Insurance and Lender of Last Resort

• Required Reserve and Credit rating

• Required Reserve and Lender of Last Resort

• Deposit protection and Lender of Last Resort

• Deposit Insurance and Credit rating

Macro-prudential regulation, three key dimensions:

• Cross-action dimension

  Time dimension

  Structural dimension

• Cross-action dimension

  Cost dimension

  Structural dimension

• Cross-action dimension

  Time dimension

  Management dimension

• Cross-sectional dimension

  Time dimension

  Structural dimension

• Cross-sactional dimension

  Time dimension

  Management dimension

Regulation is needed to ensure consumers’ confidence in the financial sector. The main reasons for financial sector regulation can be summarised as follows:

• to ensure systemic stability;

• All of them

• to provide smaller, retail clients with protection

• to protect consumers against monopolistic exploitation.

• to ensure the safety and soundness of individual financial institutions;

________________is to limit the distress of individual financial institutions.

• micro-prudential regulation

• macro-prudential regulation

• conduct of business regulation

• application of business regulation

• None of them

_________this focuses on how banks and other financial institutions manage their business.

• macro-prudential regulation

• micro-prudential regulation

• conduct of business regulation

• Protection of business regulation

• None of them

As a part of the regulation specific to the financial industry, bank_________________ refer to the legal provisions that regulate the conditions for the handling of bank failures and insolvencies.

• financial and resolution laws

• insolvency and resolution laws

• insolvency and insurance laws

• financial and insurance laws

• financial and investment laws

__________ ratios are a measure of the amount of a bank’s capital expressed as a percentage of its risk-weighted credit exposures.

• Investment adequacy

• Capital adequacy

• Financial adequacy

• Liquidity adequacy

• Loan adequacy