When regulators examine the adequacy of the financial system's liquidity it is engaging in ________ supervision.
A) microprudential
B) macroprudential
C) both microprudential and macroprudential
D) neither microprudential nor macroprudential

Question

Quizplus · Accepted Answer

When the regulators examine the adequacy of the financial system's liquidity, they are focusing on the overall stability of the financial system and its ability to withstand systemic risks. This falls under macroprudential supervision, which looks at the health and resilience of the financial system as a whole rather than just individual institutions or markets. Microprudential supervision, on the other hand, is concerned with the safety and soundness of individual banks and other financial institutions.

When Regulators Examine the Adequacy of the Financial System's Liquidity