In the UK financial sector, the regulation of financial institutions is split between microprudential and macroprudential authorities.
Which of the following policy actions is a macroprudential measure correctly matched with both the regulatory body responsible and its primary objective?
The Financial Conduct Authority (FCA) imposing a price cap on high-cost short-term credit to ensure fair treatment of retail consumers and promote competition.
The Financial Policy Committee (FPC) raising the countercyclical capital buffer to strengthen the resilience of the banking system against systemic shocks.
The Prudential Regulation Authority (PRA) establishing a minimum Liquidity Coverage Ratio for an individual commercial bank to prevent localized liquidity runs.
The Bank of England's Monetary Policy Committee (MPC) increasing the base rate of interest to reduce the risk of systemic failure across the entire financial sector.
