Deck 3: The Monetary Authorities

Question 1

The Reserve Bank of Australia (RBA)can change the level of reserves held by Australian authorised deposit-taking institutions.

Answer 1

True

Question 2

The Reserve Bank of Australia (RBA)provides end -of-the-day repurchase facilities that are free of charge for ESA holders who need funds to close out their position.

Answer 2

False

Question 3

Australian notes are manufactured by NPA,a subsidiary of the Australian Federal Government.

Answer 3

False

Question 4

The Reserve Bank of Australia (RBA)is responsible for prudential supervision of financial institutions including banks,credit unions,building societies,and insurance and superannuation companies.

Question 5

The Australian Prudential Regulation Authority (APRA)is mainly funded by levies and penalties paid by the institutions that it supervises.

Question 6

In the seventeenth century,the Bank of England became the lender of last resort for banks.

Question 7

In a payment system,settlement takes place before clearance.

Question 8

Low-value transactions made with payment instruments such as bank cheques or debit cards are settled in real time,transaction by transaction.

Question 9

The Australian Stock Exchange (ASX)settlement system for Australian equity trades is referred to as the Australian Securities and Investments Commission (ASIC).

Question 10

The original role of the first central banks in the world was to raise funds for their governments.

Question 11

The Australian Prudential Regulation Authority (APRA)supervises banks and other deposit-taking institutions while the Australian Securities and Investments Commission (ASIC)monitors the insurance and superannuation companies.

Question 12

In the nineteenth century,the Bank of England became the sole issuer of notes for England.

Question 13

Authorised Deposit-Taking Institutions (ADIs)hold exchange settlement account (ESA)with the Reserve Bank of Australia for transactions settlement.

Question 14

Prudential supervision consists in controlling risk management of financial institutions in order to guarantee the stability of the financial system.

Question 15

The Reserve Bank of Australia (RBA)is responsible for the conduct of monetary policy.

Question 16

The Reserve Bank of Australia' s monetary policy can be described as the management of short-term interest rates in pursuit of domestic policy objectives.

Question 17

Exchange settlement accounts (ESA)are accounts held by a commercial bank in another commercial bank.

Question 18

The Reserve Bank Information and Transfer System (RITS)is exclusively used for the settlement of high-value transactions.

Question 19

Reserve Bank Information and Transfer System (RITS)settles high-value payments through the RTGS.

Question 20

A primary objective of the Reserve Bank of Australia (RBA)is to act as the lender of last resort.

Question 21

Which of the following is NOT a function of the Reserve Bank of Australia (RBA)?

A)Supervisor of the payments system.
B)Lender of last resort.
C)Monetary policy maker.
D)Supervisor of financial institutions.

Question 22

Misconduct by a financial institution that harms investors is addressed by the Australian Securities and Investments Commission (ASIC).

Question 23

The Bank for International Settlements (BIS)facilitates international cooperation among monetary authorities.

Question 24

Exchange summary fax is a statement of obligations accrued during the course of the day by a financial institution participating in the payments system against:

A)businesses and households holding deposit accounts in that institution.
B)the RBA.
C)other institutions participating in the payments system.
D)the national collator.

Question 25

When injecting reserves in the banking system through a repurchase agreement the Reserve Bank of Australia (RBA):

A)buys specific types of securities from the ESA holders on the basis that the RBA will resell them back to them later.
B)sells specific types of securities to the ESA holders on the basis that the RBA will repurchase them back later.
C)buys and sells securities in the market on behalf of ESA holders.
D)buys and keeps specific types of securities in its portfolio for unspecified horizon.

Question 26

Which of the following statements is NOT correct? An exchange settlement account (ESA)is:

A)an account held by deposit-taking institutions at the Reserve Bank of Australia (RBA).
B)used to transfer funds to and from in order to settle transactions in the payments system.
C)an account whose balance represents bank reserves.
D)the account used by the Commonwealth government for its spending and its income.

Question 27

Which of the following is NOT correct? End-of-day Repurchase facility involves:

A)the Reserve Bank of Australia (RBA)providing funds on ESA.
B)making the ESA holders who benefits from the operation pay the cash rate target plus 25 basis points.
C)an ESA holder closing out a position at the end of the day.
D)the Reserve Bank of Australia (RBA)buying securities held by institutions on the basis that it will resell them back to the institutions the same day.

Question 28

The monetary authority responsible for monetary policy,financial system stability and the payments system in Australia is:

A)the Reserve Bank of Australia (RBA).
B)the Australian Prudential Regulation Authority (APRA).
C)the Australian Securities and Investments Commission (ASIC).
D)all of the above.

Question 29

Which of the following is NOT a function of the Reserve Bank of Australia (RBA)?

A)Banker for the Federal Government.
B)Issuer of Australian notes.
C)Monetary policy maker.
D)Supervisor of the financial markets.

Question 30

Which of the following statements is NOT correct? The Council of Financial Regulators (CFR):

A)supervises the RBA,APRA and ASIC.
B)reports to the Government on the adequacy of the financial regulatory system formed by the RBA,APRA and ASIC.
C)is a structure allowing cooperation and coordination among the RBA,APRA and ASIC
D)has a representative from the Government to interact with the RBA,APRA and ASIC.

Question 31

Monitoring of capital levels in financial institutions is a responsibility of the Australian Securities and Investments Commission (ASIC).

Question 32

Which of the following is NOT currently an Australian monetary authority?

A)The Reserve Bank of Australia (RBA).
B)The Commonwealth Bank of Australia (CBA).
C)The Australian Prudential Regulation Authority (APRA).
D)The Australian Securities and Investments Commission (ASIC).

Question 33

Which of the following functions was NOT a role performed by the Bank of England in the nineteenth century?

A)Lender of last resort to banks.
B)Facilitator of net settlement for banks' payment orders.
C)Prudential regulator of financial companies.
D)Sole issuer of notes in England and Wales.

Question 34

Which of the following statements is NOT correct? Real-Time Gross Settlement (RTGS):

A)is fed by ESA holder's transactions,high value CHESS transactions and Austraclear transactions.
B)settles transactions in the order they arrive in RITS.
C)requires the compilation by the national collator of all obligations that each institution participating to the payments system had that day against the other participants.
D)settles transactions one by one.

Question 35

Non-cash paper payment instruments include:

A)notes and coins.
B)bank checks.
C)debit cards.
D)credit cards.

Question 36

One ultimate goal of the Reserve Bank of Australia (RBA)in implementing monetary policy is to:

A)print and issue Australia's currency notes.
B)facilitate a safe payments system.
C)control inflation rates within a target range.
D)change the money supply in the economy.

Question 37

The Reserve Bank of Australia (RBA)manages the liquidity of the financial system by:

A)borrowing from the Bank for International Settlements (BIS).
B)borrowing from the government.
C)by buying and selling government securities and other financial instruments from/to financial institutions.
D)borrowing from foreign banks.

Question 38

In the nineteenth century,the Bank of England was changing the amount of money in circulation by:

A)settling payment orders between banks.
B)facilitating the payments system.
C)raising funds for the government.
D)issuing and buying back consols.

Question 39

The Bank for International Settlements (BIS)provides banking services to private corporations with international business activities.

Question 40

The central bank system has its roots in Europe:

A)in the sixteenth century.
B)in the seventeenth century.
C)in the eighteen century.
D)in the nineteenth century.

Question 41

When the Reserve Bank of Australia (RBA)buys government securities from a financial institution under a repurchase agreement:

A)the ESA balances increase.
B)the ESA balances decrease.
C)the ESA balances increase and then later will decrease.
D)the ESA balances decrease and then later will increase.

Question 42

Which of the following is NOT a function of the Reserve Bank of Australia (RBA)?

A)Supervisor of the payments system.
B)Provider of banking licenses.
C)Banker of the Federal Government.
D)Manager of the RITS.

Question 43

In the Australian banking industry institutions that are approved by the Australian Prudential Regulation Authority (APRA)to engage in banking business are known as:

A)Australian Saving Institutions.
B)Authorised Deposit-Taking Institutions.
C)Australian Depository Institutions.
D)Australian Financial Institutions.

Question 44

Which of the following is NOT an official goal of the RBA according to its Charter?

A)The stability of the currency of Australia.
B)The stability of Australia's balance of payments.
C)The maintenance of full employment in Australia.
D)The economic prosperity and welfare of the people of Australia.

Question 45

The role of lender of last resort is a responsibility of:

A)the Reserve Bank of Australia (RBA).
B)the Australian Securities and Investments Commission (ASIC).
C)the Australian Financial Institutions Commission (AFIC).
D)the Australian Prudential Regulation Authority (APRA).

Question 46

The oversight of the Australian payments system is a responsibility of:

A)the Reserve Bank of Australia (RBA).
B)the Australian Securities and Investments Commission (ASIC).
C)the Australian Financial Institutions Commission (AFIC).
D)the Australian Prudential Regulation Authority (APRA)

Question 47

Which of the following is NOT correct? The RTGS is a:

A)real-time system.
B)gross system.
C)bilateral system. *d differed system.

Question 48

To become an authorised deposit-taking institution (ADI)a company must among other requirements:

A)seek approval from the Reserve Bank of Australia (RBA).
B)apply in writing to the Parliament.
C)meet a certain requirement in terms of capital.
D)apply in writing to Australian Securities and Investments Commission (ASIC).

Question 49

Which of the following is NOT currently a primary function of the Reserve Bank of Australia (RBA)?

A)Conduct of monetary policy.
B)Issue of Australian currency notes.
C)Oversight of the payments system.
D)Supervision of deposit-taking institutions.

Question 50

Which of the following functions is NOT the responsibility of the Australian Prudential Regulation Authority (APRA)?

A)Oversight of banks.
B)Supervision of insurance and superannuation companies.
C)Monitoring of market operators.
D)Provision of banking business authorisations.

Question 51

The Reserve Bank of Australia (RBA)board is accountable to:

A)the Australian Federal Parliament.
B)the Governor and the Federal Treasurer.
C)the Australian Prudential Regulation Authority (APRA).
D)the Bank of International Settlements (BIS).

Question 52

9 am batch refers to the batch settlement made to each institution's exchange settlement account at 9 am based on the:

A)today's single net obligation for each institution with respect to all other participating institutions combined.
B)the today's net obligation for each institution with respect to each other participating institution one by one.
C)previous day's single net obligation for each institution with respect to all other participating institutions combined.
D)the previous day's net obligation for each institution with respect to each other participating institution one by one.

Question 53

The Reserve Bank of Australia's independence refers to:

A)its ability to conduct monetary policy without recommendations from the Government or the Prime Minister.
B)its separation from the Commonwealth Bank of Australia in 1960.
C)its ability to conduct monetary policy without accountability to the Parliament.
D)its separation from the Bank of England.

Question 54

Which of the following statements is NOT correct? Debit cards:

A)are instruments of payment available to a deposit account holder.
B)are ways to use the electronic funds in a check deposit account.
C)are an alternative form of money to cash.
D)are non-cash non-paper instruments of payment.

Question 55

Which of the following is NOT a key role of the Reserve Bank of Australia (RBA)in the payments system?

A)Promoting efficiency in the payments system.
B)Providing facilities for the final settlement of payment transactions
C)Acting in the payments system as the bank of the Australian Government and various other government and non-government entities.
D)Managing EFTPOS systems.

Question 56

Which of the following is NOT connected to the RITS?

A)CHESS.
B)Austraclear.
C)PSB.
D)SWIFT PDS.

Question 57

Which of the following statements is NOT correct? High-value payments in the ASX are:

A)fed to RITS by CHESS.
B)settled through the real-time gross settlement system.
C)trigger interbank transfers among ESAs.
D)processed through SWIFT PDS.

Question 58

Which of the following is NOT a function of the Reserve Bank of Australia (RBA)?

A)Monetary policy maker.
B)Issuer of Australian coins.
C)Lender of last resort.
D)Manager of the Federal Government securities' registry.

Question 59

Which of the following statements is NOT correct? Australian notes:

A)are a form of money called cash.
B)are issued by the Reserve Bank of Australia (RBA).
C)are printed by the Treasury.
D)are legal tender.

Question 60

The manufacturer of Australian notes is:

A)the Reserve Bank of Australia (RBA).
B)the Australian Securities and Investments Commission (ASIC).
C)the Australian Financial Institutions Commission (AFIC).
D)the Australian Prudential Regulation Authority (APRA).

Question 61

Which of the following is NOT a responsibility of ASIC?

A)Consumer protection in superannuation,insurance and deposit taking and credit.
B)Management of licensing.
C)Oversight of market operators.
D)Design of bank prudential regulation.

Question 62

The day-to-day implementation of US monetary policy is performed by:

A)the Federal Open Market Committee.
B)the Federal Reserve Bank of New-York.
C)the US government.
D)none of the above.

Question 63

In China the supervision of the banking system is the responsibility of:

A)the People's Bank of China.
B)the China's Bank Regulatory Commission.
C)the State Development Bank.
D)the Import and Export Bank.

Question 64

Which of the following is a responsibility of ASIC?

A)Detection of misconduct by market participants.
B)Supervision of superannuation funds.
C)Implementation of monetary policy.
D)Banking services to central banks.

Question 65

The supervision of insurance and superannuation companies is the responsibility of:

A)the Reserve Bank of Australia.
B)the Australian Securities and Investments Commission.
C)the Australian Financial Institutions Commission.
D)the Australian Prudential Regulation Authority.

Question 66

Which of the following is a function of the Bank for International Settlements (BIS)?

A)Facilitating international cooperation among prudential regulation authorities.
B)Conducting monetary policies in member countries.
C)Providing banking services to governments.
D)Supporting governments during financial crises.

Question 67

Explain why it is so importance for central banks to be independent of government intervention.

Question 68

The Australian Securities and Investments Commission (ASIC)has been established as a supervisory authority since:

A)1930.
B)1959.
C)1991.
D)1998.

Question 69

Which of the following is NOT a responsibility of ASIC?

A)Oversight of the payment system.
B)Management of market licensing.
C)Oversight of market participants and stockbrokers.
D)Oversight of financial advisers.

Question 70

The Australian Prudential Regulation Authority is mainly funded by:

A)the institutions that it supervises.
B)the Reserve Bank of Australia.
C)the Australian taxpayers.
D)shareholders.

Question 71

Monetary policy conduct and prudential supervision are performed by a unique monetary authority in:

A)China.
B)Australia.
C)New Zealand.
D)None of the above.

Question 72

Which of the following is a responsibility of the Australian Prudential Regulation Authority (APRA)?

A)Consumer protection in superannuation,insurance,deposit taking and credit.
B)Lending of last resort.
C)Oversight of market operators.
D)Design of bank prudential regulation.

Question 73

Describe briefly the payments clearing mechanism.

Question 74

The Australian Securities and Investments Commission (ASIC)is charged with responsibility for:

A)enforcing company and financial services laws to protect consumers,investors and creditors.
B)maintaining stability in the financial market.
C)monitoring the performance of the equity market.
D)monitoring the performance of companies.

Question 75

Which of the following statements is NOT correct? The Reserve Bank of New Zealand:

A)cooperates with the Australian Prudential Regulation Authority.
B)operates as a branch of the Reserve Bank of Australia.
C)is responsible for prudential regulation.
D)conducts monetary policy with an inflation target.