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f) The experience of the Global Financial Crisis has made policymakers vigilant about ensuring the stability of the financial system and avoiding a repeat of

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f) The experience of the Global Financial Crisis has made policymakers vigilant about ensuring the stability of the financial system and avoiding a repeat of the GFC during the shock of COVID-19 pandemic. Choose one of the following policies as an example of prudential regulation and explain how it contributes to the stability of the financial system. (2 sentences) . Policy #1 Deregulation of the financial market which introduced a floating exchange rate . Policy #2 The decision made by the Board of the Reserve Bank of Australia to lift the cash rate to prevent runaway inflation . Policy #3 The tightening of lending limits on commercial banks and the requirement that all commercial banks hold an Exchange Settlement account with the Central Bank

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