Question

Moral suasion is __________.

• A. a term descriptive of corrupt practices of many banks
• B. a term applied to banks that are conservative in their banking practices
• C. persuasion of banks to adhere to central bank desires
• D. none of the above

Answer 1

Answer: (C)

persuasion of banks to adhere to central bank desires

Moral suasion refers to the persuasion of banks by the Central banks, so as they adhere to the Central bank's policies. It is a qualitative method of credit control undertaken by the central bank so as to achieve their economic objectives.