Section A

Question A1. Explain the difference between covered and uncovered interest parity.

Question A2. What are the benefits, in terms of the efficiency of financial intermediation,

provided by banking globalisation?

Question A3. Explain the financial trilemma. How can regulatory wars be avoided? Provide an

example involving international agreements.

Question A4. Explain how budget deficits may create a negative cross-border externality which,

in turn, may hamper international fiscal policy coordination.