Which regulation governs transactions between member banks and their affiliates?

Regulation W is the correct answer as it specifically regulates the transactions between member banks and their affiliates, as established under the Bank Holding Company Act. This regulation sets forth the parameters for permissible transactions to ensure that conditional aspects of these transactions do not lead to abusive practices or excessive risk-taking, ultimately promoting the safety and soundness of the banking system.

Regulation W addresses concerns such as restrictions on the amount of transactions, ensuring fair pricing and terms, and defining the limitations on the extension of credit to affiliates. This regulatory framework is essential for maintaining a clear separation between banking entities and their affiliates to mitigate potential conflicts of interest that may arise from transactions within a corporate family.

Other options, while related to banking regulations, focus on different aspects of banking or financial services. Regulation Y deals with the regulation of bank holding companies, including their acquisition and operations, rather than specifically addressing transactions with affiliates. Regulation N governs the advertising of credit-related products, impacting how financial institutions market their services, while Regulation P focuses on the privacy of consumer financial information. Each of these serves a different purpose within the broader regulatory environment, but Regulation W is the one specifically targeting transactions between banks and their affiliates.