Question: 3. Considering the relationship between traditional banking and shadow banking which of the following statements is INCORRECT? O The traditional picture of banking emphasizes allocation

of the following statements is INCORRECT? O The traditional picture of banking

3. Considering the relationship between traditional banking and shadow banking which of the following statements is INCORRECT? O The traditional picture of banking emphasizes allocation of saving from household depositors to business investors ) The shadow banking system involves a shift from loan based credit to market based credit O Both systems face solvency risk, but there is no liquidity risk for shadow banking since it can always raise funds in liquid wholesale money markets O Both traditional banking and shadow banking involve creation of private money of various types O In modern banking, the key prices are determined in competitive dealer markets, both capital markets and money markets

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