Whenever a nation has experienced a major banking crisis, the central bank may choose to maintain a backing ratio of more than 100% because of a fear of:
A) unemployment.
B) a panic leading to capital flight.
C) accounting irregularities.
D) expropriation through excessive taxation.

Question

Quizplus · Accepted Answer

In times of banking crisis, there is a risk of panic leading to capital flight. If the central bank maintains a backing ratio of more than 100%, it can help restore confidence in the banking system and prevent massive withdrawals of capital, which could exacerbate the crisis.

Whenever a Nation Has Experienced a Major Banking Crisis, the Central