Answer the following questions with the heading: Systemic Instability of the Banking Sector: Causes and Cures

• The logic behind why the two ultimate sources of balance sheet funding for the banking sector are: (a) the monetary deposits which banks create in the process extending credit to the local public and (b) their borrowing from abroad (10/100).
• The logic of the liquidity risk constraints on the balance sheet growth of the banking sector as a whole, and how the central banks elastic currency policy removes these constraints. (5/100)
• The logic of the solvency risk constraints on the balance sheet growth of the banking sector as a whole, and how various government measures weaken these constraints under a contemporary fiat money system (10/100).