Question

Disintermediation refers to: a. Financial institutions preferring to move away from individual accounts to corporate accounts. b. Government providing alternatives to normal deposit accounts so as to reduce the dependence of the economy on depository institutions. c. The FED reducing its performance and involvement in the open market economy. d. The movement of funds more directly than indirectly through financial institutions.

Which agency is a major regulator of Banks?

Answer 1

Disintermediation as the word suggests refers to the removal of intermediaries. It can be done from a supply-chain where goods are sold directly to consumers and also can be seen in Mutual Funds where funds can be invested directly to the AMC rather than through agents.

Therefore, the most appropriate option from the 4 choices given in the question shall be "the movement of funds more directly than indirectly through financial institutions".

In the US the major agency that regulates the banks and is also responsible for overseeing the monetary policy is the Federal Reserve Board or as we commonly call it Fed. Apart from it, there is another agency known as the Office of the Comptroller of Currency (OCC) which is also responsible for supervising the banks in the US.