19-70 How Can the Regulators Reduce the Effects of Moral

question 53

Multiple Choice

19-70 How can the regulators reduce the effects of moral hazard in the absence of depositor discipline?

• A)By allowing DIs to undertake high-risk high-return asset investments.
• B)By basing deposit insurance premiums on a DI's deposit size.
• C)By charging explicit deposit insurance premiums and implicit premiums on DIs.
• D)By exhibiting excessive capital forbearance.
• E)By implementing prompt corrective action capital zones based on rules rather than discretion.

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