How Global Finance Works: Checkpoint 1

Quick checkpoint - five questions on the global financial system, eurodollars, imbalances, SWIFT and Basel rules.

Question 1 of 5 Which is the world's largest financial market by daily turnover?

The stock market The foreign exchange market The gold market The housing market

Several trillion dollars of currencies are traded each day.

Question 2 of 5 What is a eurodollar?

A euro coin A US dollar deposited in a bank outside the United States A European central bank bond A type of cryptocurrency

The name predates the euro and refers to offshore dollars.

Question 3 of 5 A country's current account balance equals what?

Exports only Savings minus investment Government spending Population growth

Surplus countries save more than they invest; deficit countries borrow from abroad.

Question 4 of 5 What does SWIFT do?

Moves money between banks physically Sends secure payment instructions between banks Sets interest rates Prints currency

SWIFT is a messaging network; money moves through correspondent accounts.

Question 5 of 5 What did Basel I require?

Banks hold capital of at least 8 percent of risk-weighted assets Banks hold no capital Banks lend only to governments Banks close on weekends

Riskier assets needed more capital to absorb possible losses.

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