Economics · Financial Sector Reform
Financial stability is often distinguished from price stability because a system may have moderate inflation but still face balance-sheet and liquidity vulnerabilities. Financial stability broadly refers to a condition in which:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1capital markets always rise steadily
- 2the financial system can withstand shocks without major disruption to intermediation and payments✓
- 3only public sector banks remain solvent
- 4all banks make profits every year
Correct answer
the financial system can withstand shocks without major disruption to intermediation and payments
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