ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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safety and soundness
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security and liability
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investments and risk
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diversity and loans
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Detailed explanation-1: -The basic purpose of banking supervision is to safeguard the stability of the financial system, in order to prevent the vital role of the banking sector in the economy from suffering significant shocks or even collapsing. The competent authority therefore focuses on the solvency and conduct of supervised institutions.
Detailed explanation-2: -Introduction. The Fed has supervisory and regulatory authority over many banking institutions. In this role the Fed 1) promotes the safety and soundness of the banking system; 2) fosters stability in financial markets; and 3) ensures compliance with laws and regulations under its jurisdiction.
Detailed explanation-3: -The Supervisory Review and Evaluation Process (SREP) is a set of procedures carried out on an annual basis by the supervisory authorities to ensure each credit institution has in place the strategies, processes, capital and liquidity that are appropriate to the risks to which it is or might be exposed to.
Detailed explanation-4: -Granting licence to commercial banks. Inspection of the other banks. Implementing Deposit Insurance scheme. Controlling Non-Banking financial institutions.