Capital Standards helps maintain the confidentiality in the banking system and promotes stability in the financial system.2 pointsTRUEFALSE

The statement is TRUE.

Capital standards are essential regulations that require banks to hold a minimum amount of capital relative to their risk-weighted assets. These standards are intended to enhance the resilience of the banking system by ensuring that banks have enough capital to absorb losses during financial distress. By maintaining adequate capital buffers, banks can reduce the risk of insolvency, which ultimately promotes stability in the financial system.

Furthermore, strict capital standards help regulate banks in a way that protects the confidentiality of consumer information. When banks are financially stable, they are better equipped to handle client data responsibly and securely. Therefore, capital standards not only help in maintaining the confidentiality of consumer information but also contribute to overall financial stability, making the banking system more trustworthy for customers and investors alike.