2016-FRR Exam Dumps | While contractually, depositors are not required to keep liquid funds on deposit for very long, in fact

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Financial Risk and Regulation (FRR) Series
GARP.2016-FRR.v2025-06-21.q161
Question 20

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Question 20/161

While contractually, depositors are not required to keep liquid funds on deposit for very long, in fact they tend to leave their deposits for longer periods of time, even if interest rates rise and the bank does not raise its deposit interest rate. What does a bank consider these deposits to be?

A. Credible deposits

B. Core deposits

C. Permanent deposits

D. Tangible equity

Correct Answer: B

Comprehensive and Detailed In-Depth Explanation:
Core deposits are stable, low-cost funds (e.g., savings, checking accounts) that depositors tend to leave with the bank over time, despite contractual flexibility to withdraw them. This stability is due to customer behavior and inertia, making them a reliable funding source under Basel III's Net Stable Funding Ratio (NSFR).
Credible deposits (A) and permanent deposits (C) are not standard terms, andtangible equity (D) is a capital measure, not a deposit type.
Reference:BCBS, "Basel III: The Net Stable Funding Ratio," October 2014, para. 22-25; GARP FRR Study Notes, Liquidity Risk Section.

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