Yellen Says Fed Helped Make Financial Institutions Safer

The video discusses measures taken to make the financial and banking systems safer post-financial crisis. It highlights the introduction of stress tests, which assess banks' capital adequacy under adverse conditions, and improvements in supervision and capital planning. Additionally, it covers reforms in the shadow banking sector, including changes to money market funds and derivatives markets, to reduce systemic risks. The video emphasizes the need for ongoing vigilance to manage risks outside regulated sectors.

What was a key measure introduced to enhance the safety of the banking system?

• Reducing the number of banks

• Increasing short-term funding

• Conducting annual stress tests

• Eliminating capital requirements

During the financial crisis, what was the purpose of the stress tests conducted on major banking organizations?

• To increase bank profits

• To assess the capital adequacy during adverse conditions

• To reduce the number of banks

• To eliminate competition

What is a significant outcome of the annual stress tests on banks?

• Banks can ignore regulatory requirements

• Banks are required to reduce their workforce

• Banks must raise capital if they lack sufficient reserves

• Banks are allowed to increase risky investments

What reforms were made to the shadow banking system to enhance its safety?

• Increased reliance on short-term funding

• Reduction in the number of financial institutions

• Adoption of reforms in money market funds

• Elimination of all derivatives

Why is it important to monitor risks outside the regulated sectors of the financial system?

• To increase the number of regulations

• To reduce the number of banks

• To ensure activities do not migrate to unregulated areas

• To eliminate competition