Yellen Says Banking System Is Much Safer and Sounder

The video discusses measures taken to enhance the safety of the financial system, including stress tests for banks, increased capital and liquidity requirements, and reforms in derivatives and money market funds. These efforts aim to ensure banks can withstand severe economic shocks and prevent future financial crises. While the system is now safer, the possibility of a financial crisis cannot be entirely ruled out.

What is the primary purpose of the stress tests conducted by the Fed on major banks?

• To increase bank profits

• To reduce unemployment rates

• To lower interest rates

• To assess banks' ability to withstand economic shocks

What is one of the key changes made to the derivatives market to improve financial stability?

• Eliminating all derivatives

• Allowing derivatives to be traded without oversight

• Central clearing of most standardized derivatives

• Increasing the complexity of derivative webs

What is the role of liquidity requirements for systemic banks?

• To lower interest rates

• To reduce the number of bank branches

• To ensure banks can meet deposit outflows during crises

• To increase bank profits

What reform was implemented to prevent runs on money market funds?

• Government guarantees for all deposits

• Fixed net asset values for all funds

• Variable values for major institutional funds

• Elimination of money market funds

What is the speaker's outlook on the possibility of future financial crises?

• There will definitely be another crisis soon

• The system is less safe than before

• The system is much safer, but a crisis is still possible

• Financial crises are now impossible