How Can the Regulators Reduce the Effects of Moral Hazard

Multiple Choice

How can the regulators reduce the effects of moral hazard in the absence of depositor discipline?

A) By allowing DIs to undertake high-risk high-return asset investments.
B) By basing deposit insurance premiums on a DI's deposit size.
C) By charging explicit deposit insurance premiums and implicit premiums on DIs.
D) By exhibiting excessive capital forbearance.
E) By implementing prompt corrective action capital zones based on rules rather than discretion.