R01 International markets and standard setters: free practice questions

1. Question 1 of 5

   Which international body sets standards on anti-money laundering and countering terrorist financing?

   Option A: The International Organization of Securities CommissionsOption B: The Basel Committee on Banking SupervisionOption C: The Financial Action Task ForceOption D: The Financial Stability Board

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   The answer is C: The Financial Action Task Force

   The Financial Action Task Force (FATF) sets international standards on anti-money laundering and countering terrorist financing.

   Why the other options are wrong

   A

   IOSCO brings securities regulators together to set common standards for securities markets.

   B

   The Basel Committee is the main standard setter for the prudential regulation of banks.

   D

   The FSB coordinates national authorities and makes recommendations on the global financial system.

2. Question 2 of 5

   Which body is the primary global standard setter for the prudential regulation of banks?

   Option A: The European Central BankOption B: The Basel Committee on Banking SupervisionOption C: The International Association of Insurance SupervisorsOption D: The International Swaps and Derivatives Association

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   The answer is B: The Basel Committee on Banking Supervision

   The Basel Committee on Banking Supervision sets prudential standards for banks and provides a forum for banking supervision matters.

   Why the other options are wrong

   A

   The ECB manages monetary policy for the euro area; it isn't the global bank standard setter.

   C

   The IAIS sets standards for the insurance sector, not banks.

   D

   ISDA represents participants in the privately negotiated derivatives industry.

3. Question 3 of 5

   Which pairing of international body and role is correct?

   Option A: IOSCO: sets common standards for insurance supervisors worldwideOption B: ISMA: sets monetary policy and interest rates for euro countriesOption C: FSB: coordinates national authorities and advises on the global financial systemOption D: IAIS: represents participants in the privately negotiated derivatives industry

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   The answer is C: FSB: coordinates national authorities and advises on the global financial system

   The FSB coordinates national financial authorities and makes recommendations about the global financial system.

   Why the other options are wrong

   A

   IOSCO brings together securities regulators; the IAIS covers insurance.

   B

   ISMA supervises international debt markets; the ECB sets euro monetary policy.

   D

   The IAIS sets insurance standards; ISDA represents the derivatives industry.

4. Question 4 of 5

   Which of the following is one of the three European Supervisory Authorities?

   Option A: The European System of Financial Supervision's Central Banks CommitteeOption B: The European Systemic Risk Board (ESRB)Option C: The International Association of Insurance Supervisors (IAIS)Option D: The European Insurance and Occupational Pensions Authority (EIOPA)

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   The answer is D: The European Insurance and Occupational Pensions Authority (EIOPA)

   The three ESAs are the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority (EIOPA).

   Why the other options are wrong

   A

   There is no such committee among the ESAs; the three are the EBA, ESMA and EIOPA.

   B

   The ESRB monitors system-wide risk; it isn't one of the three ESAs.

   C

   The IAIS is a global insurance standard setter, not a European Supervisory Authority.

5. Question 5 of 5

   Within the EU framework, what is the difference between the European Systemic Risk Board (ESRB) and the European System of Financial Supervision (ESFS)?

   Option A: Both bodies deal only with insurance and occupational pension schemesOption B: The ESRB supervises individual firms; the ESFS monitors the whole systemOption C: The ESRB sets euro interest rates; the ESFS sets bank capital rulesOption D: The ESRB watches risk to the whole system; the ESFS supervises individual firms

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   The answer is D: The ESRB watches risk to the whole system; the ESFS supervises individual firms

   The ESRB carries out macro-prudential supervision of the system as a whole. The ESFS, a network of national supervisors, carries out micro-prudential supervision of individual institutions.

   Why the other options are wrong

   A

   Both cover the wider financial system, not just insurance and pensions.

   B

   This reverses their roles: the ESRB looks at the system, the ESFS at individual firms.

   C

   Euro interest rates are the ECB's job; neither body sets them.

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