1. "Once the government intervenes in the economy,the banking system becomes weaker and inefficient, the currency becomes debauched,and so on.The banking system becomes weak because the government preys on it,or because it sets up a system of deposit insurance or lender of last resort that undermines the banks'own incentives to maintain their financial health"(Dowd,pp.35-6)

From the argument above , could the market function efficiently without a central bank? Justify youranswer with examples.(25 marks)

1. Illustrate the main features of the Basel Capital Accords. Justify your answer with the example from bank institutions in Malaysia.