The correct answer is B. Banking Laws.
Banking laws are the rules and regulations that govern the banking industry. They are designed to protect consumers, ensure the safety and soundness of the financial system, and promote competition. Banking laws can limit the power of credit creation by commercial banks in a number of ways. For example, they may restrict the amount of money that banks can lend, or they may require banks to hold a certain amount of capital in reserve.
Fiscal policy is the use of government spending and taxation to influence the economy. It is not a direct way to limit the power of credit creation by commercial banks. However, fiscal policy can affect the demand for credit, which can in turn affect the amount of credit that banks are willing to create.
REPO rates are the interest rates at which banks lend money to each other on a short-term basis. They are an important tool for managing the supply of money in the economy. However, they do not directly limit the power of credit creation by commercial banks.
Business pessimism is a general feeling of uncertainty and discouragement among businesses. It can lead to a decrease in investment and hiring, which can in turn reduce the demand for credit. However, business pessimism is not a direct way to limit the power of credit creation by commercial banks.