Requiring financial institutions that arrange risky transactions to hold some of the risk themselves is known as:
A)being "too big to fail." requiring
B)"skin in the game." acting as a
C)"lender of last resort." restricting
D)"economies of scale."

Question

Quizplus · Accepted Answer

Requiring financial institutions that arrange risky transactions to hold some of the risk themselves is known as "skin in the game." This means that they have a financial stake in the success or failure of the transaction, which can help to prevent reckless behavior and reduce the likelihood of financial crises. "Too big to fail" refers to the idea that certain institutions are so important to the economy that they cannot be allowed to fail, while "lender of last resort" refers to the role of central banks in providing emergency funding to financial institutions. "Economies of scale" refers to the cost savings that result from increased production or size, which is not directly related to holding risk in transactions.

Requiring Financial Institutions That Arrange Risky Transactions to Hold Some