The internationalization of banking has weakened national ...

[swpotter12]

The internationalizatio n of banking has weakened national safeguards against banking collapse, but at the same time it has made the need for effective safeguards more urgent. Discuss.
 
  What will be an ideal response?

Question 2

The confidence problem of the Bretton Woods systems articulated by Robert Triffin refers to
 
  A) the unwillingness of central banks to accumulate currency for fear of not being able to convert it to gold in case a run on the banks occurs.
  B) consumer fear of stock market instability.
  C) producer fear of rising wages.
  D) the lack of convertibility of gold into silver.
  E) low consumer spending because of balance of payment crises.

[jackie]

Answer to Question 1

True. Students should elaborate on:
(1 ) No deposit insurance, in particular, inter-bank deposits are unprotected
(2 ) Absence of reserve requirements
(3 ) Bank examination more difficult to enforce
(4 ) Not clear which group of regulators has responsibility for monitoring a given bank's assets
(5 ) Not clear which central bank, if any, is responsible for providing Lender of Last Resort assistance.

Answer to Question 2

A