Governments supervise banks mainly to do each of the following, except:
A) reduce the potential cost to taxpayers of bank failures.
B) be sure the banks are following the regulations set out by banking laws.
C) reduce the moral hazard risk.
D) eliminate all risk faced by investors.

Question

Quizplus · Accepted Answer

The supervision of banks by governments aims to reduce the potential cost to taxpayers of bank failures, ensure that banks are following the regulations set out by banking laws, and reduce the moral hazard risk. However, it cannot eliminate all risk faced by investors as the very nature of banking involves a certain level of risk.

Governments Supervise Banks Mainly to Do Each of the Following