Risk based deposit insurance premiums and risk based capital standards are examples of regulatory discipline.

Question

Quizplus · Accepted Answer

Risk-based deposit insurance premiums and risk-based capital standards are tools used by regulators to ensure that financial institutions manage their risks appropriately. These measures require banks to hold capital in proportion to the riskiness of their assets and adjust insurance premiums based on the risk profile of the bank, thereby imposing regulatory discipline.

Risk Based Deposit Insurance Premiums and Risk Based Capital Standards