Exam 17: International Banking: Reserves, Debt, and Risk

Concerning international lending risk,currency risk is the risk of asset losses due to changing currency values.

Which of the following is not considered an "owned" reserve?

Concerning international lending risk of commercial banks,____ is closely related to political developments in a borrowing country,especially the government's views concerning international investments and loans.

Eurodollars are:

The diagram below represents the exchange market position of the United States in trade with the United Kingdom.Starting at the equilibrium exchange rate of $3 per pound,suppose the demand for pounds rises from D0 to D1. Figure 17.1 Foreign Exchange Market -Refer to Figure 17.1.Under a fixed exchange rate system,U.S.monetary authorities would have to supply 8 million pounds in exchange for dollars to keep the exchange rate at $3 per pound.

The U.S.gold outflow that began in the late 1940s and continued through the 1960s was due in part to:

Which of the following assets makes use of the basket valuation technique?

Which of the following assets was (were) created in 1970 to provide additional international liquidity,in the belief that increasing world trade requires more liquidity for larger expected payments imbalances?

Most analysts feel that the financial difficulties in East Asia were triggered by

To reduce their exposure to developing country debt,lending commercial banks have practiced all of the following except:

In 1974 the United States revoked a 41-year ban on U.S.citizen's ownership of gold.

If a nation with a balance-of-payments deficit is willing and able to initiate quick actions to increase export receipts and decrease import payments,the amount of international reserves needed will be relatively large.

With an international gold standard,if a country ended up with a deficit from the balances on its current and capital accounts,it would:

Which of the following is not a characteristic of the Eurodollar market? It:

In 1975 the official price of gold was abolished as the unit of account for the international monetary system.As a result,gold was demonetized as an international reserve asset.

Because the value of the SDR is tied directly to the value of the U.S.dollar,a 10 percent dollar depreciation would result in a 10 percent decrease in the SDR's value.

By the 1990s,the British pound had replaced the U.S.dollar as the world's key currency.

For developing countries such as Mexico and Brazil,severe economic problems in the 1980s were caused by:

Concerning international debt,____ refers to a negotiated reduction in the contractual obligations of the debtor country and includes schemes such as markdowns and write-offs of debt.

Foreign currencies constitute the smallest component of the world's international reserves.