Article Summary The European Union (EU)has Initiated a Program Called the Bank

question 131

Multiple Choice

Article Summary
The European Union (EU) has initiated a program called the Bank Recovery and Resolution Directive (BRRD) ,which is designed to protect taxpayers from bailing out banks during a banking crisis,and eleven EU countries are currently under pressure to adopt these new rules or face legal action.Under the rules,the burden of bailing out troubled banks is being placed on bank creditors,shareholders,and possibly depositors,with governments,and therefore taxpayers,no longer being saddled with this liability.The process is being referred to as a "bail-in," with the legislation advocated by the Bank of England,the European Central Bank,and the Federal Reserve.
-Refer to the Article Summary.Prior to the initiation of the BRRD,the European Union had essentially been bailing out troubled banks.In doing this,the EU was,in effect,acting as a

• A)shadow bank.
• B)conductor of open market operations.
• C)private equity firm.
• D)lender of last resort.

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Definitions:

Tax Purposes

Considerations or actions taken with regard to taxation, such as reporting income, deductions, and credits.

Bonds Redeemed Early

The process by which an issuer repays the principal amount of bonds before their maturity date.

Redemption Price

The amount paid to redeem a security or investment, often found in the terms of bonds or preferred stock.

Carrying Value

The book value of assets and liabilities as presented on a company’s balance sheet, which is the original cost minus any depreciation, amortization, or impairment costs.