ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Yes, I understand this from the notes
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No, I don’t understand this from the notes
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No, I don’t understand this, as I have not read the notes
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None of the above
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Detailed explanation-1: -The focus of micro-prudential policy is the stability of individual financial institutions. By contrast, the focus of macro-prudential policy is the stability of the financial system as a whole.
Detailed explanation-2: -To keep the analysis simple, monetary policy is limited to the setting of short-term, nominal interest rates, while macroprudential policy is limited to the determination of capital requirements for banks.
Detailed explanation-3: -Macroprudential measures aim to increase the financial system’s resilience to shocks by addressing identified systemic risks. Macroprudential authorities monitor the financial system, identifying risks and vulnerabilities, and implement measures to ensure financial stability.
Detailed explanation-4: -“micro-prudential regulation examines the responses. of an individual bank to exogenous risks. it does not. incorporate endogenous risk, and it neglects the. systemic implications of common behaviour”