Deposit insurance premiums or costs imposed on a DI through activity constraints rather than direct monetary charges describes implicit premiums.

Question

Quizplus · Accepted Answer

Implicit premiums are costs imposed on a deposit insurance (DI) through activity constraints, such as restrictions on risky lending, rather than direct monetary charges. Explicit premiums, on the other hand, are direct charges to the DI to cover potential losses from insuring deposits.

Deposit Insurance Premiums or Costs Imposed on a DI Through