If a financial institution is systemically important:
A)it is an important part of the Federal Reserve banking system.
B)the business cycle affects it more than it affects the average financial institution.
C)its activities have the potential to cause a banking crisis.
D)it is not allowed to engage in maturity transformation.

Question

Quizplus · Accepted Answer

Systemically important financial institutions are those whose activities have the potential to cause a banking crisis due to their size, interconnectedness, and complexity. As such, they are subject to stricter regulations to ensure their stability and prevent systemic risk.

If a Financial Institution Is Systemically Important