The Purpose of the Countercyclical Buffer Proposed by Basel III

question 33

Multiple Choice

The purpose of the countercyclical buffer proposed by Basel III is to

• A)expose those banks with inadequate capital to survive economic downturns.
• B)assist insolvent banks build capital during economic expansions.
• C)protect the banking system and reduce systematic exposures to economic downturns.
• D)enhance global movement of funds to those countries experiencing excess aggregate credit growth.
• E)force DIs to immediately adjust capital to meet the 2.5 percent level of buffer capital required.

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Definitions:

Frustrations

Feelings of dissatisfaction or annoyance arising from obstacles hindering the achievement of a goal or desire.

Planning Fallacy

The tendency to underestimate the time, costs, and risks of future actions, while overestimating the benefits, leading to overly optimistic project timelines and outcomes.

Hierarchy Of Goals

A system of organizing objectives that range from high-level, long-term goals to lower-level, short-term actions, enabling structured pursuit of ambitions.

Distal Goals

Long-term objectives or aims that are not immediately achievable, requiring extended effort and planning.