Discuss. “The internationalization of banking has weakened national safeguards against banking collapse, but at the same time it has made the need for effective safeguards more urgent.”
Please elaborate fully on the five difficulties below in regulating international banking.
1. No deposit insurance, in particular, inter-bank deposits are unprotected
2. Absence of reserve requirements
3. Bank examination more difficult to enforce
4. Not clear which group of regulators has responsibility for monitoring a given bank’s assets
5. Not clear which central bank, if any, is responsible for providing Lender of Last Resort assistance.