Author Question: Many observers believe that the largely unregulated nature of global banking activity leaves the ... (Read 43 times)

Alainaaa8 · **on:** Jun 30, 2018

Many observers believe that the largely unregulated nature of global banking activity leaves the world financial system vulnerable to bank failure on a massive scale. Is this a real threat? If so, what measures have governments taken to reduce it?

What will be an ideal response?

Question 2

An attempt by a central bank to alter the money supply by buying or selling domestic assets

A) will leave both domestic money supply and foreign reserves unchanged.
B) will cause an offsetting change in aggregate demand.
C) will lead to a rise in domestic employment and output.
D) will lead to a decrease in domestic employment and output.
E) will cause an offsetting change in foreign reserves and leave the domestic money supply unchanged.

alexisweber49 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Yes, this is a real threat. A high level of inter-bank depositing implies that problems affecting a single could be highly contagious and could spread quickly to banks with which it is thought to do business. In response to this threat, the Basel Committee was created in 1974 to coordinate the surveillance and regulation among bank regulators from different countries.

Answer to Question 2

E