The Following Are Protective Mechanisms That Have Been Developed by Regulators

question 29

Multiple Choice

The following are protective mechanisms that have been developed by regulators to promote the safety and soundness of the banking system except:

• A)encouraging banks to rely more on deposits rather than debt or capital as a cushion against failure
• B)encouraging banks to limit lending to a single customer to no more than 10 per cent of capital
• C)the provision of deposit insurance
• D)the periodic monitoring of banks

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Definitions:

The United States

A country in North America comprising 50 states, characterized by a federal form of government and known for its economic and military power.

The Former Soviet Union

A term referring to the socialist state that existed from 1922 to 1991, comprising Russia and several other republics.

Personal Savings

The portion of an individual's income that is not spent on consumption or taxes and is instead retained for future use or investment.

United States

A country located in North America, consisting of 50 states, a federal district, five major self-governing territories, and various possessions.