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FRM Part II · FRM Exam Part II · Digital Resilience and Financial Stability: The Quest for Policy Tools in the Financial Sector

Which development is most likely to increase the speed at which a digital-era run on a bank can unfold compared with past episodes?

Instant mobile banking combined with social media lets depositors move funds and share worries within hours, accelerating runs relative to the past. Branch withdrawals are slower, longer settlement cycles do not speed runs, and higher capital ratios reduce rather than increase vulnerability.

  1. ABranch-based deposit withdrawals
  2. BInstant mobile banking and social media that let depositors move funds and share concerns within hoursCorrect
  3. CLonger settlement cycles for securities
  4. DHigher minimum capital ratios

Explanation

Digital channels let depositors withdraw instantly and information spread rapidly, compressing the time for liquidity stress to build. Branch withdrawals are slower, longer settlement does not speed runs, and higher capital is a mitigant, not an accelerant.

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