Answer the following two questions: 1. Imagine yourself in a job interview for a

Question

Answer the following two questions:

1. Imagine yourself in a job interview for a position with a large international bank. The interviewer mentions that recently the bank has experienced some problem loans to foreign governments. The interviewer asks you which factors you think they should consider when evaluating a loan proposal involving a foreign governmental agency. How do you respond?

2."The internationalization of banking has weakened national safeguards against banking collapse, but at the same time it has made the need for effective safeguards more urgent." Discuss

Explanation / Answer

1. Well to begin with, while extending loans to a foreign government I will look for factors which are best indicators of the country's stability. Those being,

Inflation rate: the lower the better

Debt to GDP ratio :do

Mode of repayment

History of defaults

Credit rating of the country

2. We can argue for the weakness of banking sector by the collapse of 2008. The collapse of leman brothers sent a showckwave to the global economy. Banks after Banks got into the slump and there was a fear.

For the need of effective safegaurds, argue with BASEL III norms. the way the banks are connected and the quantum of economic activity the facilitate is quite surprising. So, due to incresaed internationalisation of banking its necessary to safegaurd our banks as they are important for domestic as well as the global economy.

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