A "forbearance" policy in dealing with weak banks is opposed by the __________ policy.

Question

Quizplus · Accepted Answer

The prompt corrective action policy opposes a forbearance policy in dealing with weak banks. Under this policy, weak banks are required to take corrective actions to improve their financial health or face harsh restrictions, including closure. In contrast, forbearance policies allow weak banks to continue operating with little regulatory intervention, which can lead to further deterioration of their financial condition and pose systemic risks to the banking sector.

A "Forbearance" Policy in Dealing with Weak Banks Is Opposed