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FRM Part II · FRM Exam Part II · Solvency, Liquidity and Other Regulation After the Global Financial Crisis

Under Dodd-Frank, the Financial Stability Oversight Council (FSOC) was created. Which is one of its principal roles?

The FSOC identifies risks to US financial stability and can designate nonbank financial companies as systemically important, subjecting them to enhanced prudential supervision. It does not set monetary policy, provide deposit insurance or audit listed companies; those are handled by other bodies.

  1. ASetting monetary policy interest rates
  2. BIdentifying systemic risks and designating nonbank financial companies as systemically important for enhanced supervisionCorrect
  3. CInsuring bank deposits up to the statutory limit
  4. DAuditing the financial statements of all listed companies

Explanation

FSOC monitors threats to US financial stability and can designate nonbank financial companies and market utilities as systemically important, subjecting them to enhanced prudential standards. Monetary policy is the Federal Reserve's role, and deposit insurance is the FDIC's.

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