Bank regulators impose capital requirements in order to
A)increase the amount of leverage in the economy.
B)provide an incentive for banks to hold risky assets.
C)ensure banks can pay off depositors.
D)increase the probability of a credit crunch.

Question

Quizplus · Accepted Answer

Capital requirements are imposed to ensure that banks have enough capital to absorb losses and pay off depositors, thus maintaining financial stability.

Bank Regulators Impose Capital Requirements in Order to