1.

Regulation and supervision of the financial system include 3 risk mitigation strategies to balance the safety net, which are:

a.Regulation, supervision and enforcement

b.Enforcement, supervision and protection

c.Audit, compliance and licensing

d.Regulations, supervision and examination

2.

Central banks are financial institutions that do which if the following 3 functions:

a.Manages the governments finances, controls availability of money & credit and serves as the bank to commercial banks

b.Manages monetary policy, controls commercial banks and supervises credit unions

c.Manages the government budget, controls commercial banks corporate governance and regulates the stock markets

d.Manages monetary policy, manages fiscal policy and promotes economic growth

3.

List the six parts of the financial system - provide an example of each, explaining why each is important to the overall interconnectedness of the financial system.

List 5 specific objectives that central bankers pursue to reduce the volatility of the economic and financial systems explain the rationale for each:

4. List and explain the 4 most important principles of a successful central bank design: