Capital regulation

Which of the following describe functions of capital?

• Protect deposit insurance funds

• Insolvency avoidance

• Encourage safer investment strategies

• All answers are correct

Which of the following constitutes a rationale for capital regulation?

• "More skin in the game"

• Increased market discipline

• Deposit insurance

• None of these

Insufficient level of capital conservation buffer will lead to restrictions on banks':

• Dividend payments

• Retained income

• Capital buffer

• Risk-weighted assets

Which "sanctions" do adequately capitalized banks in the U.S. are likely to face:

• Asset growth restrictions

• No brokered deposits

• Restrictions on executive bonus pay

• None of these

Which of the following activities are undertaken by bank supervisory agencies (ECB and FED) to make sure banks are adequately capitalized?

• Stress-tests

• Onsite examinations

• Offsite examinations

• All of these