Market Participants Should, Where Activity Justifies It, Aim to Reduce

question 18

Multiple Choice

Market participants should, where activity justifies it, aim to reduce settlement and related credit risk on currency transactions by:

• A) Establishing realistic daylight limits for counter
• B) Monitoring all payments to counterparties who are
• C) Establishing legally binding bilateral netting ag
• D) Seeking pre-payment.

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Definitions:

Automatic Stabilizers

Economic policies and programs, such as unemployment insurance and taxation, that automatically adjust with economic conditions to stabilize income and spending.

Recession

An interval of momentary economic contraction characterized by decreased commercial and industrial operations, commonly signaled by a reduction in Gross Domestic Product over two back-to-back quarters.

Government Budget Deficit

The financial situation that occurs when a government's expenditures exceed its revenues in a given fiscal year.

Automatic Stabilizer

Economic policies and programs, like unemployment insurance and progressive taxation, designed to automatically adjust to changes in economic conditions to stabilize the economy.