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Consider the following statements regarding the Financial Stability Board (FSB):
- It is an international body that monitors and makes recommendations about the global financial system.
- The decisions of the FSB are legally binding on its member institutions.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements regarding the Financial Stability Bo...
The correct answer is option 'A': Statement 1 only.
Explanation:
The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. However, the decisions of the FSB are not legally binding on its member institutions. Let's understand this in more detail:
Financial Stability Board (FSB):
1. The Financial Stability Board (FSB) is an international organization that was established in 2009 by the G20 countries.
2. The FSB's primary objective is to promote global financial stability and reduce systemic risk in the international financial system.
3. It acts as a coordinating body for national financial authorities and international standard-setting bodies.
4. The FSB's membership includes national central banks, regulatory authorities, and international organizations involved in financial regulation and supervision.
5. It provides a platform for cooperation and information sharing among its members and facilitates the development and implementation of international financial reforms.
Role of the FSB:
1. Monitoring: The FSB monitors the global financial system, identifies vulnerabilities, and assesses potential risks to financial stability.
2. Recommendations: The FSB makes recommendations to address these risks and vulnerabilities, aiming to enhance the resilience of the financial system.
3. Standard-Setting: The FSB promotes the implementation of international financial standards and codes of conduct to ensure a level playing field and reduce regulatory arbitrage.
4. Peer Review: The FSB conducts peer reviews to assess the implementation of its recommendations and the effectiveness of its members' financial regulations.
Legal Binding:
1. While the FSB's recommendations carry significant weight and influence, they are not legally binding on its member institutions.
2. The FSB operates on a voluntary basis, and its recommendations are implemented by member countries based on their own legal and regulatory frameworks.
3. Each member country has the flexibility to adopt and implement the FSB's recommendations according to their specific circumstances and national laws.
In summary, the Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. However, its decisions are not legally binding on its member institutions.
Explanation:
The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. However, the decisions of the FSB are not legally binding on its member institutions. Let's understand this in more detail:
Financial Stability Board (FSB):
1. The Financial Stability Board (FSB) is an international organization that was established in 2009 by the G20 countries.
2. The FSB's primary objective is to promote global financial stability and reduce systemic risk in the international financial system.
3. It acts as a coordinating body for national financial authorities and international standard-setting bodies.
4. The FSB's membership includes national central banks, regulatory authorities, and international organizations involved in financial regulation and supervision.
5. It provides a platform for cooperation and information sharing among its members and facilitates the development and implementation of international financial reforms.
Role of the FSB:
1. Monitoring: The FSB monitors the global financial system, identifies vulnerabilities, and assesses potential risks to financial stability.
2. Recommendations: The FSB makes recommendations to address these risks and vulnerabilities, aiming to enhance the resilience of the financial system.
3. Standard-Setting: The FSB promotes the implementation of international financial standards and codes of conduct to ensure a level playing field and reduce regulatory arbitrage.
4. Peer Review: The FSB conducts peer reviews to assess the implementation of its recommendations and the effectiveness of its members' financial regulations.
Legal Binding:
1. While the FSB's recommendations carry significant weight and influence, they are not legally binding on its member institutions.
2. The FSB operates on a voluntary basis, and its recommendations are implemented by member countries based on their own legal and regulatory frameworks.
3. Each member country has the flexibility to adopt and implement the FSB's recommendations according to their specific circumstances and national laws.
In summary, the Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. However, its decisions are not legally binding on its member institutions.
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Consider the following statements regarding the Financial Stability Board (FSB): It is an international body that monitors and makes recommendations about the global financial system. The decisions of the FSB are legally binding on its member institutions.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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