Provide in each case a brief explanation articulating why the statement may be true, false or even uncertain. Simply stating True or False will result in ZERO marks for the question. Type your answers in the space provided. Please do not exceed the word limit, only the first 300 words of your answer will be read and marked for each question.

6.Banks with higher capital ratios are always safer hence the reason for RBNZ to raise capital requirements from the current 10.5 percent minimum to 18 percent for the four large banks and 16 percent for the other smaller banks.

7.As economies of scale are achieved with increasing size, bank mergers should be encouraged by regulators as larger banks are safer and thus the financial system is safer.