FIs Are Particularly Vulnerable to Sudden and Unexpected Demand for Funds.Liquidity

question 40

Multiple Choice

FIs are particularly vulnerable to sudden and unexpected demand for funds.Liquidity regulations are imposed for all of the following reasons, except to:

• A)ensure that authorised DIs have sufficient liquidity
• B)prevent liquidity problems and possible contagion effects that may spread to other FIs
• C)increase liquidity for prudential management
• D)ensure that authorised DIs have sufficient capital

---

Definitions:

Criminal Prosecution

The process by which a person is charged, tried, and possibly convicted by the judicial system for a crime.

Mediation

A type of dispute resolution where the parties to a lawsuit meet with a neutral third party (the mediator) in an effort to settle the case. The mediator’s job is to listen to the evidence, help the litigants come to understand each other’s viewpoint regarding the controversy, and then facilitate the negotiation of a voluntary resolution to the case. Mediation is not binding on the parties.

Neutral Third-Party

An impartial entity involved in conflict resolution or mediation, not favoring any side involved in the dispute.

Dispute Resolution

The process of resolving a conflict, dispute, or claim between parties through negotiation, mediation, arbitration, or legal means.