Capital adequacy: Difference between revisions

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1. ''Bank regulation - capital requirements.''
1. ''Bank regulation - capital requirements - Bank for International Settlements (BIS).''


Capital adequacy is the system of regulating banks (and other financial institutions) by requiring them to maintain minimum acceptable levels - and types - of capital, adequate to absorb their potential credit losses and other trading losses.
Capital adequacy is the system of regulating banks (and other financial institutions) by requiring them to maintain minimum acceptable levels - and types - of capital, adequate to absorb their potential credit losses and other trading losses.




2. ''BIS - capital requirements.''
Requirements are laid down internationally by the Bank for International Settlements (BIS) and implented and monitored by domestic central banks.  


The term 'capital adequacy' also refers to the prevailing minimum amount of risk weighted capital that banks are required to maintain in proportion to the risk assets that they assume, normally used in connection with the requirements laid down internationally by the Bank for International Settlements (BIS) and monitored by domestic central banks.  
Historically, the BIS capital adequacy standard had been 8%.


Historically, the BIS capital adequacy standard was 8%.
Under the Basel III framework this standard was increased (strengthened) substantially - very roughly doubled - and its measurement refined.  


Under the Basel III framework this standard is increased (strengthened) substantially - very roughly doubled - and its measurement is refined.  
 
2. ''Insurance & other contexts.''
 
Similar risk management and regulation in other contexts.
 
For example, insurance companies.




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* [[Countercyclical buffer]]
* [[Countercyclical buffer]]
* [[Economic capital]]
* [[Economic capital]]
* [[G-SIB]]
* [[Insurance]]
* [[IRB]]
* [[IRB]]
* [[IRRBB]]
* [[IRRBB]]

Revision as of 15:49, 18 March 2021

1. Bank regulation - capital requirements - Bank for International Settlements (BIS).

Capital adequacy is the system of regulating banks (and other financial institutions) by requiring them to maintain minimum acceptable levels - and types - of capital, adequate to absorb their potential credit losses and other trading losses.


Requirements are laid down internationally by the Bank for International Settlements (BIS) and implented and monitored by domestic central banks.

Historically, the BIS capital adequacy standard had been 8%.

Under the Basel III framework this standard was increased (strengthened) substantially - very roughly doubled - and its measurement refined.


2. Insurance & other contexts.

Similar risk management and regulation in other contexts.

For example, insurance companies.


See also