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    Question

    What role does the Memorandum of Understanding (MoU)

    signed between the Reserve Bank of India (RBI) and the Bank of England (BoE) play in relation to the Clearing Corporation of India Limited (CCIL), and how does it benefit UK-based banks?:
    A The MoU focuses on restricting international clearing activities involving CCIL, protecting the interests of UK-based banks. Correct Answer Incorrect Answer
    B It signifies a unilateral reliance by RBI on BoE's regulatory and supervisory activities to ensure the stability of the Indian financial system. Correct Answer Incorrect Answer
    C The MoU enables UK-based banks to bypass regulatory requirements when clearing transactions through CCIL. Correct Answer Incorrect Answer
    D It establishes a framework for BoE to place reliance on RBI’s regulatory and supervisory activities, facilitating CCIL's recognition as a third-country Central Counterparty (CCP) for UK-based banks. Correct Answer Incorrect Answer
    E The MoU emphasizes the independence of CCIL from both RBI and BoE, allowing it to operate without regulatory oversight. Correct Answer Incorrect Answer

    Solution

    The MoU between RBI and BoE aims to establish a framework for the Bank of England to place reliance on RBI’s regulatory and supervisory activities concerning CCIL. This cooperation is intended to facilitate CCIL's recognition as a third-country Central Counterparty (CCP), which is a prerequisite for UK-based banks to clear transactions through CCIL.

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