Module: General Practice
Q7: Consider the following statements:
Assertion (A): Designated D-SIBs are subjected to higher levels of supervisory oversight compared to other commercial banks.
Reason (R): The failure of a D-SIB can have a cascading effect on the financial system, potentially leading to a collapse of real economic activity.
Reason (R): The failure of a D-SIB can have a cascading effect on the financial system, potentially leading to a collapse of real economic activity.
✅ Correct Answer: A
Because D-SIBs are systemically critical, the regulator imposes stricter supervisory reviews and higher capital buffers to reduce the probability of failure.
This heightened scrutiny is a hallmark of being a Domestic Systemically Important Bank (D-SIB).
This heightened scrutiny is a hallmark of being a Domestic Systemically Important Bank (D-SIB).