Question
1. based on structural risk, describe the sources of bank failures, and discuss how failures at the individual bank level can turn into a risk
1. based on structural risk, describe the sources of bank failures, and discuss how failures at the individual bank level can turn into a risk of system-wide failure?
2. How can the central bank and the government respond to the structural risks that you explained in part 3.1? In your answer, explain the resolution tools in detail and discuss the rationale behind such interventions by the government and central bank?
3. Considering your discussions in parts 1. and 2. above, what are the lessons to be learnt for governments and for central banks from the financial crisis of 2007-2008? In your answer, also discuss the current regulations in the banking sector and why they are important for the crisis time resolution.
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