Explanation:
The withdrawal of debit caps does not impact an institution's ability to take contingent actions to strengthen its liquidity position. Debit caps are limits set on the amount that can be debited from an account in a given period. Withdrawing these caps simply allows institutions to access more intraday credit, but it does not directly affect their ability to take contingent actions. It is important to note that while this may not be a typical scenario, it is a possibility that institutions must consider in their risk management strategies.
Choice A is incorrect. The shutdown of securitization markets can significantly impact an institution's ability to take contingent actions. Securitization markets provide a source of
Ultimate access to all questions.
Q.4072 Several market factors can affect the institution’s ability to take contingent actions that help in strengthening the institution’s liquidity position. Which among the following factors does NOT pose such an effect to institutions?
A
Shutdown of securitization markets
B
Deposit runoff
C
Failure of the counterparties to roll over their deposits
D
Withdrawal of debit caps
No comments yet.