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Time T=0, the balance sheet of Bank 1 and Bank 2 is as follows: Time T=1, Bank 1 and Bank 2 write-off the MBS portfolio
Time T=0, the balance sheet of Bank 1 and Bank 2 is as follows: Time T=1, Bank 1 and Bank 2 write-off the MBS portfolio Based on the above example, which of the following statements is correct? A. The Lender of Last Resort cannot save Bank 1. B. Deposit insurance can prevent the collapse of both Bank 1 and Bank 2. C. Higher reserve requirements can prevent the run at both Bank 1 and Bank 2 . D. If deposit insurance is available, Bank 1 can survive and continue its operations
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