Required: a) Explain why Bank of England's intervention during the September 1992 was described as "too little, too late. Explain why this directly led to 1992 British exchange rate fiasco? Required: b) Discuss speculators' role in this incident?
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- Choose the correct answer 1.) Which of the following measures would result in an increase in the money supply in the economy? [S1] Sale of government securities to the public by the central bank. [S2] Increase in the expenditure by the government. [S3] Reduction in tax collection by the government. [S4] Purchase of government securities from the public by the central bank. A.) Statement 3 only. B.) Statements 2 and 4 only C.) Statements 1 and 3 only. D.) Statements 2, 3 and 4. 2.) The currency notes in circulation as well as the proportion of the total money supply held in the form of currency are influenced by which of the following? [S1] The trade volume in the economy [S2] The level of prices in the economy [S3] The development of banks and banking habits of the people A.) Statements 1 and 2 only B.) Statements 2 and 3 only C.) Statements 1, 2 and 3 D.) Statement 3 only 3.) What is the most likely effect of financial innovation and increasing real GDP, respectively, on the demand…1. How has deregulation of the financial services industry affected the makeup offinancial intermediaries? How do you think intermediaries’ characteristics willchange in the future? 2. How do banking organizations in the United States differ from banking organizationsin other countries? Why are they different? 3. How is money created in a banking system that has fractional reserve requirements(i.e., a fractional reserve system)? 4. Describe the open market operations undertaken by the Federal Reserve. Whattype of trades would the Fed make if it wanted to increase interest rates? 5. How would funds—that is, the money supply—in the United States be affectedif the Federal Reserve increases reserve requirements? Give an example.A 3. Describe the process of build-up, trigger, and resolution of one non-US systemic banking crisis of your choice (e.g.: early 90s, Sweden or Japan; mid- 90s, Mexico or China; post 2008, Ireland or Iceland).
- 1. describe and explain how the monetary system much of the trading world knew in 1800 evolved into the prevailing system today. 2. discuss the merits of returning to a gold standard. What step might be taken to move in that direction? 3. describe and explain using specific example what a central bank is and what its exchange control authority means.Core Principle 3 states information is the basis for decisions. Suggest one way in which the problems associated with the shadow banking sector during the 2007−2009 financial crisis could be mitigated in the future.37 Which of the following is NOT the role of Ministry of Finance under IFSA 2013 and FSA 2013? Select one: It appoint and terminate contract of central bank deputy governor for misconduct It approve or disapprove mergers & takeover of financial institutions such as banks. It control and regulate credit in the country through using monetary tools such as interest rates and money supply. It control exports & imports through easing or restricting credits to exporters and importers.
- 1) comment on banks’ and insurance companies’ behaviour and identify main drivers of their performance (e.g. what does explain European banks’ low profits); 2) identify main source of risk for banks and financial organisations nowadays; 3) comment on benefits and flaws of regulation as well as hypothesise main potential effects of new set of rulesAmerican International Group (AIG) stood at the centre of the financial crisis of 2008. It was one of the main institutions issuing credit default swaps. With default rates increasing and the economic climate worsening, it found itself in liquidity problems. AIG was forced to seek a government rescue and was effectively nationalised. Shortly after the bailout in 2009, it also become the centre of a media firestorm in the so-called AIG bonus payments controversy. Questions:1. Critically evaluate the factors leading to AIG’s liquidity problems, bailout, and nationalisation. 2. Critically assess the reasons and judgment behind the AIG bonus payments controversy. Write a short essay imagining what would have happened if AIG hadn’t been saved.Problem 1 Does the lender of last resort function of central banks introduce moral hazard into the financial system? Explain. Briefly explain why central bank independence can be a solution to the time- inconsistency problem. What is shadow banking and what was its role in the financial crisis of 2007-2009?
- What is a financial market? What is the role of a financial market? 3-2 What would happen to the standard of living in the United States if people lost faith in our financial markets? Why? 3-3 How does a cost-efficient capital market help to reduce the prices of goods and services? 3-4 The SEC attempts to protect investors who are purchasing newly issued securities by requiring issuers to provide relevant financial information to prospective investors. The SEC does not provide an opinion about the real value of the securities. Hence, an unwise investor might pay too much for some stocks and consequently lose heavily. Do you think the SEC should, as a part of every new stock or bond offering, render an opinion to investors on the proper value of the securities being offered? Explain.Q2-15 In a fixed exchange rate regime, the government Select one: a. establishes capital controls. b. establishes exchange rate controls. c. buys and sells currency through the central bank. d. expands the money supply.Which of the following is NOT usually associated with “financial risk”? a. A rise in the country’s interest rates. b. A new government has been voted in. c. Fluctuation in a country’s currency. d. Difficulty in accessing funds from banks.