One fundamental purpose for regulating capital is to limit losses to the government and other institutions arising from deposit insurance claims.

Question

Quizplus · Accepted Answer

Regulating capital helps limit losses to the government and other institutions arising from deposit insurance claims by setting minimum capital requirements for financial institutions. This ensures that they have sufficient funds to cover potential losses and reduces the likelihood of needing to rely on government-backed deposit insurance.

One Fundamental Purpose for Regulating Capital Is to Limit Losses