Narrow banking is seen by some economists as an answer to the problem of

Question

Quizplus · Accepted Answer

Narrow banking is a proposed solution to the moral hazard problem in banking. It suggests that banks should only engage in low-risk activities like accepting deposits and making loans, rather than engaging in risky investment activities. This would reduce the likelihood of bank failures and the need for government bailouts, which can exacerbate moral hazard by encouraging banks to take on even more risk.

Narrow Banking Is Seen by Some Economists as an Answer