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The use of regulations by the regulators to mitigate risk in the banking sector should focus...

The use of regulations by the regulators to mitigate risk in the banking sector should focus on the following:
● Minimum Requirements
● Supervisory Review
● Market Discipline

If you had to choose one, which would it be and why?

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Answer #1

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Market discipline is the answer

It refers to obligation by the banks and financial services so that they don't undertake risky pursuits while doing business. This puts the onus on the banks to factor in and consider the risks involved to the stakeholders while doing business operations. This keeps a check on the safety and security of the banking sector.

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