Economics · Banking System Concepts
Banking system resilience depends partly on confidence because the business model involves leverage and maturity transformation. This makes public trust particularly important since:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1loss of public confidence can trigger sudden deposit withdrawals and liquidity crises✓
- 2confidence has no link with liquidity conditions
- 3trust is relevant only to cooperative banks
- 4banks can function normally without liabilities
Correct answer
loss of public confidence can trigger sudden deposit withdrawals and liquidity crises
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