Capital is at the top of any bank supervisor’s list. The most basic form of capital is equity capital, which is the shareholder’s financial interest or net worth. Equity capital serves several purposes: it provides a permanent source of revenue for the shareholders and
　　funding for the bank; it is available to bear risk and absorb losses; it provides a base for further growth; and it gives the shareholders reason to ensure that the bank is managed in a safe and sound manner. Minimum capital adequacy ratios are necessary to reduce the risk of loss to depositors, creditors and other stockholders of the bank and to help supervisors pursue the overall stability of the banking industry.
　　The Basle Committee’s "Core Principles for Effective Banking Supervision" requires that supervisors set prudent and appropriate minimum capital adequacy requirements and encourage banks to operate with capital in excess of the minimum. When it appears appropriate due to the particular risk profile, uncertainties regarding the asset quality, risk concentrations or other adverse characteristics of a bank’s financial condition, considerations of requiring higher than minimum capital ratios are encouraged. If a bank’s ratio falls below the minimum, banking supervisors will act to ensure that it has realistic plans to restore the minimum in a timely fashion, or may consider putting additional restrictions on the bank’s operations.
　　61. How does the bank supervisor concern the capital of a commercial bank?
　　A. Bank supervisor puts the capital to the most important place of his concerns.
　　B. Bank supervisor cares less about the capital of a commercial bank.
　　C. Bank supervisor lists the capital in the first line of his notebook.
　　D. Bank supervisor does not concern the capital too much.
　　62. Which is NOT true about equity capital of a bank?
　　A. It can bring income for its shareholders.
　　B. It can provide financial support to a bank.
　　C. It can improve the development of a bank.
　　D. It cannot indicate whether a bank is managed in a safe or sound manner.
　　63. What’s the use of minimum capital adequacy ratio for a bank? The ratio is used _________.
　　A. to measure whether a bank is managed in a safe way.
　　B. to reduce risks to depositors and creditors of a bank.
　　C. to help supervisors pursue the stability of banking
　　D. all of the above
　　64. Supervisors usually encourage commercial banks to operate with capital __________ the minimum standard.
　　A. above
　　B. below
　　C. within
　　D. equal to
　　65. This passage tells us about the importance of ____________.
　　A. capital adequacy
　　B. minimum capital ratio
　　C. equity capital
　　D. Core Principles for Effective Banking Supervision

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