A bank is termed 'too big to fail' when
A) it is of such economic importance that the government cannot allow it to fail
B) it is so large and profitable that failure is very unlikely
C) it is spread across so many countries, it cannot fail in any one country
D) it has enough money to pay off all its debts
E) all of the above

Question

Quizplus · Accepted Answer

A bank is termed 'too big to fail' when it is of such economic importance that the government cannot allow it to fail, as its failure could have severe consequences on the overall economy. This term is used particularly for banks that have a significant impact on the financial system and the wider economy, so much so that their failure could cause a domino effect on other banks and industries. The other options do not fully capture the essence of the term 'too big to fail.'

A Bank Is Termed 'Too Big to Fail' When