Claudio Borio: The Challenge of Large, Complex Financial Institutions (2/7)

What is the main topic of the session discussed in the introduction?

• The role of journalists in financial reporting

• The history of Basel regulations

• The impact of technology on financial systems

• Reconciliation of sovereignty with effective supervision

What is the primary purpose of the countercyclical capital buffer?

• To increase bank profits during booms

• To address the procyclicality of the financial system

• To standardize global banking practices

• To eliminate all financial risks

Which of the following is a key feature of the countercyclical capital buffer?

• It is a tool for increasing interest rates

• It is designed to be used only during financial crises

• It requires international cooperation for effectiveness

• It eliminates the need for national supervision

What is the paradox of financial instability mentioned in the implementation section?

• Financial systems are unpredictable and chaotic

• Financial systems are always stable

• Financial systems are most stable during crises

• Financial systems appear strongest when they are most fragile

Which indicator is primarily used for the build-up phase of the countercyclical capital buffer?

• Unemployment rates

• Interest rate fluctuations

• Credit to GDP ratio

• Stock market indices

What is a major challenge in implementing the countercyclical capital buffer across borders?

• Indicator and control problems

• Language barriers

• Cultural differences

• Lack of technology

How does the countercyclical capital buffer address the control problem?

• By increasing taxes on international banks

• Through cooperative arrangements between host and home countries

• By eliminating cross-border banking

• Through unilateral decisions by home countries

What is the role of host countries in the countercyclical capital buffer mechanism?

• To follow home country regulations

• To ignore international risks

• To activate the buffer when risks build up

• To solely focus on domestic banks

What broader implication does the countercyclical capital buffer suggest for international cooperation?

• A shift towards a macroprudential perspective

• Eliminate all forms of international cooperation

• Countries should act independently

• Focus on micro-level financial institutions

What is the main conclusion about sovereignty in a globalized world?

• Sovereignty should be ignored

• International cooperation is necessary for prosperity

• Absolute sovereignty is feasible and desirable

• Sovereignty is irrelevant to financial systems