Exam 24: International Banking and Financial Regulations

The rate of interest charged borrowers from most Eurocurrency loans is tied to the prevailing level of the:

The recent trend of deregulation in the financial market is likely to experience some slowing due to the recent credit crisis of 2007-2009.

A change in the tax rate levied on the interest income of foreign investors is an example of political risk.

Most Eurobonds are denominated in U.S. dollars.

When a large bank begins to expand its activities abroad it usually starts with shell branches and full-service banking offices due to the limited initial capital requirements and customer needs for a basic menu of conventional banking services; then, if business warrants, international departments and Edge Act subsidiaries typically will be organized by the bank.

The Federal Reserve Board gives U.S. international banks wider latitude in providing services and expanding abroad than is true of the regulatory authorities of other countries.

IBFs are branch offices of major international banks located mainly in the Bahamas and Grand Cayman Islands to attract Eurocurrency deposits.

International banks make loans to foreign customers but do not generally advise customers regarding market conditions.

Deposits in an International Banking Facility differ from domestic deposits in that:

IBFs may be located in any foreign country that does not discriminate against or prohibit the entry of U.S. banks.

Using the the description or the definition below, identify each of the key terms and concepts presented in this chapter a. A domestically based set of computerized accounts recording international banking transactions. b. Deposits in a bank denominated in a currency other than the currency of the bank's home currency. c. Loans made by a bank in a currency other than the currency in the bank's home country. d. A long-term debt security denominated in a foreign currency.

In December 1995 the Federal Reserve Board voted to allow U.S. banks to acquire foreign business interests without prior notice provided the banks involved devote no more than 2 percent of capital to the new venture and are already well capitalized and well managed.

In the Eurobond market, a borrower usually contacts a major international bank with a request to form a syndicate to place a new bond issue.

In terms of total assets held, the country or area of the globe where the foreign branches of U.S. banks hold the most assets is:

The Federal Reserve cannot terminate the U.S. operations of foreign banks.

The rapid expansion of banking world wide lead to ____________ annually as bank employees and government officials have dipped into the growing cash reserves of leading international banks.

The Asian portion of the global banking crisis of the 1990s began in Japan and ultimately spread to the following country/countries:

An international bank's promise to pay for goods stored overseas or goods shipped between two nations is known as a letter of credit.

In 1988, several central banks agreed to impose uniform capital requirements on the banks under their jurisdiction.

A debt security denominated in a currency other than those of the countries where most or all the security issue will be sold is known as a: