FRM Part II · FRM Exam Part II · Solvency, Liquidity and Other Regulation After the Global Financial Crisis
Dodd-Frank created the Financial Stability Oversight Council (FSOC). Which of the following is a core function of the FSOC?
The FSOC identifies threats to US financial stability and can designate systemically important nonbank financial companies and financial market utilities for enhanced prudential supervision by the Federal Reserve. Monetary policy, deposit insurance and accounting standards are handled by other bodies: the FOMC, the FDIC and the FASB.
- AIdentifying risks to US financial stability and designating nonbank financial companies for enhanced prudential supervisionCorrect
- BSetting monetary policy and the federal funds rate target
- CInsuring deposits at commercial banks up to the coverage limit
- DSetting accounting standards for US public companies
Explanation
The FSOC monitors systemic risks and can designate nonbank financial companies and market utilities as systemically important, subjecting them to Federal Reserve supervision. Monetary policy belongs to the FOMC, deposit insurance to the FDIC, and accounting standards to the FASB.
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