In the Event of a Sudden Loss in Confidence in the Ability

Multiple Choice

In the event of a sudden loss in confidence in the ability of the commercial banks to redeem deposits, the Bank of Canada would probably

A) impose severe financial penalties on the commercial banks by charging them interest at higher than the Bank rate.
B) offer to sell government bonds to the chartered banks.
C) take over the operation of any banks in severe difficulties.
D) suspend operation of the banking system until the panic subsided.
E) lend reserves to the commercial banks.