Some critics argue that under the current deposit insurance regulations, neither insured depositors nor uninsured depositors have sufficient incentives to discipline riskier DIs. Explain why
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- 19... Acquiring information on a bank's activities in order to determine a bank's risk is difficult for depositors and is another argument for government Question 19 options: a) ownership. b) forbearance. c) regulation. d) recall.Given that banks are operating within a highly disruptive economy it is imperative that a robust Technology Risk Management Framework (TRMF) is in place.i. Name two risk factors that need to be taken into account in the TRMF? ii. Describe two scenarios that could constitute a risk to the bank if the factors mentioned in Question i. were not taken into consideration. iii. What is the possibility of these risks occurring and what would the impact to the bank be? iv. Describe how you would prioritise the risks to ensure the least impact?4. A history of deposit insurance on the web site of the FDIC notes: "Some have argued at different points in time that there have been too few bank failures because of deposit insurance, that it undermines market discipline, ... and that it amounts to a federal subsidy for banking companies." (a) (b) What does it mean to describe deposit insurance as undermining "market discipline"? From this perspective, why might deposit insurance lead to too few bank failures? In what sense might deposit insurance be considered a federal subsidy for banks? (c) If deposit insurance has these potential drawbacks, why do economists and members of Congress overwhelmingly support it?
- When banks have deposits in checking accounts with the Fed, these deposits for the bank are __________________ of the commercial bank a. Liabilities b. Assets c. Net Worth d. EquityExplain the the four principal tools used by Bank of Ghana formonetary policy, stating clearly how they are applied.Google M Your Fin To ng.cengage.com/static/nb/ui/evo/index.html?deploymentld=58326424525984828412294502&elSBN=9781337915601&id=1276.. Q Search this course CENGAGE MINDTAP Aplia Homework: Monetary Theory and Policy 1. The opportunity cost of holding assets as money Suppose you've just inherited $10,000 from a relative. You're trying to decide whether to put the $10,000 in a non-interest-bearing account so that you can use it whenever you want (that is, hold it as money) or to use it to buy a U.S. Treasury bond. The opportunity cost of holding the inheritance as money depends on the interest rate on the bond. For each of the interest rates in the following table, compute the opportunity cost of holding the $10,000 as money. Interest Rate on Government Bond Opportunity Cost (Percent) (Dollars per year) 6. 3 What does the previous analysis suggest about the market for money? O The supply of money is independent of the interest rate. O The quantity of money demanded increases as the…
- Deposit Insurance, as mentioned in the LIVE lecture (Week 3), is one way a Governmencould help with 'what type of risk faced by Banks? Choose the most direct one.Economi 15. The federal deposit insurance corporation (FDIC) insures individual bank accounts up to $250,000 per account. Which of the following statements regarding FDIC insurance is true? FDIC insurance a. does not eliminate the need for reserve requirements because bank runs can't be eliminated in a fractional reserve banking system b. has prevented bank runs because the FDIC pays depositors interest at the discount rate on their accounts c. eliminates the need for reserve requirements because banks are not liable for any depositor losses d. works in coordination with reserve requirements to ensure depositor confidence, preventing bank runs.When regulators engage in macroprudential regulation, they focus on O the safety and soundness of the entire financial institution. O the credit standards of all loans held by the financial institution. O the safety and soundness of the financial system in aggregate. O the safety and soundness of cach liability of the financial institution. A
- QUESTION 1 Which actions by banks ensure that reserves are adequate to cover deposit outflows? A. Customer relations managment B. Asset management C. Liquidity management D. Liability managementShould banks have to hold 100% of their deposits? Why or why not? -Discussion-The financial market is volatile and requires constant monitoring to ensure bank managers canbe reactive and proactive towards changing business and economic environments. Given this,examine how bank managers can employ financial forwards, futures and swap contracts toreduce the bank’s potential exposure to loss when market conditions change.
