How does the government regulate banking system in a country?
Answers
Bank regulation is kind of like government regulation which subjects banks to certain requirements having certain restrictions and guidelines which are designed to create market transparency between banking institutions and the individuals and corporations with whom they conduct the business.
Banks have been regulated by governments for hundreds of years. These regulations include:
1. deposit insurance
2. preventing banks from obtaining excessive economic power
3. reduction in the cost of individual bank insolvency
4. avoiding the effects of bank failures on the economy
5. protection of the payments system
6. serving the interests of popularly elected officials
7. enhancement of the Federal Reserve's control over the money supply
8. suppressing competition and protecting consumers.