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Question 65

'Basel III Accord' or simply 'Basel III', often seen in the news, seeks to

AOptions

A) develop national strategies for the conservation and sustainable use of biological diversity

B) improve banking sector's ability to deal with financial and economic stress and improve risk management

C) reduce the greenhouse gas emissions but places a heavier burden on developed countries

D) transfer technology from developed countries to poor countries to enable them to replace the use of chlorofluorocarbons in refrigeration with harmless chemicals

BSolution

'Basel III' is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the global financial crisis of 2007-09. Its primary objective is to strengthen the regulation, supervision, and risk management within the banking sector. The Accord aims to improve the banking sector's ability to absorb shocks arising from financial and economic stress, reduce the risk of spillover from the financial sector to the real economy, and improve risk management and governance. It does this by increasing bank capital requirements, introducing new liquidity standards, and measures to curb excessive leverage.

Options A, C, and D describe other international agreements or goals (biodiversity conservation, greenhouse gas emissions reduction, and ozone-depleting substances replacement), which are unrelated to the Basel Accords' focus on banking regulation.

CStrategy

For terms frequently appearing in the news, understand their core subject matter and purpose. Basel III is a well-known financial regulation term. Associate such terms with their relevant domains (e.g., banking, environment, trade) to quickly narrow down options. Look for keywords that directly relate to the field.

DSyllabus Analysis

This question falls under Indian Economy, specifically relating to global financial regulations and their impact or relevance.

EQuestion Analysis

Easy. Basel III is a well-known term in the context of global financial regulations, making its purpose identifiable for those following economic news.