Explain how macro-prudential regulations work to limit systemic risk in the financial system.
Answer to relevant QuestionsDo you think that the central bank, as lender of last resort, should also supervise the financial industry? Why or why not? Why do you think bank managers are not always willing to pursue strategies to reduce the fragility of their institutions? How might the existence of the government safety net lead to increased concentration in the banking industry? A country in the European Monetary Union that runs very large public deficits or shows a persistently high and rising debt-to-GDP ratio violates a fiscal compact among the member countries of the union. Explain how this ...When countries in a common currency area show persistently rising ratios of public debt to GDP, how does it affect the credibility of an inflation-targeting central bank?
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