Capital adequacy: Difference between revisions
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The system of regulating banks (and other financial institutions) by requiring them to maintain minimum acceptable levels of capital, adequate to absorb their potential credit losses and other trading losses. | The system of regulating banks (and other financial institutions) by requiring them to maintain minimum acceptable levels of capital, adequate to absorb their potential credit losses and other trading losses. | ||
2. | 2. | ||
The current 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. | The current 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. | ||
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Under Basel III this standard will be increased (strengthened) substantially - very roughly doubled - and its measurement will be refined. | Under Basel III this standard will be increased (strengthened) substantially - very roughly doubled - and its measurement will be refined. | ||
== See also == | == See also == | ||
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* [[Capital Adequacy Directive]] | * [[Capital Adequacy Directive]] | ||
* [[Capital Requirements Directive]] | * [[Capital Requirements Directive]] | ||
* [[Countercyclical buffer]] | |||
* [[PLAC]] | |||
* [[GCLAC]] | |||
* [[Microprudential]] | |||
* [[Settlement risk]] | * [[Settlement risk]] | ||
* [[Slotting]] | * [[Slotting]] | ||
[[Category:Compliance_and_audit]] | |||
Revision as of 20:13, 2 September 2015
1.
The system of regulating banks (and other financial institutions) by requiring them to maintain minimum acceptable levels of capital, adequate to absorb their potential credit losses and other trading losses.
2.
The current 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 standard has been 8%.
Under Basel III this standard will be increased (strengthened) substantially - very roughly doubled - and its measurement will be refined.
