Capital conservation
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1. Company law.
The company law principle - also known as capital maintenance - that capital should be conserved for the protection of creditors.
For example, dividends can only legally be paid out of retained profits, not out of capital.
2. Financial services - banks - supervision - regulation - capital adequacy.
A capital adequacy requirement for all banks to build up an additional loss-absorbing capital cushion to improve their resilience to future stresses.
The idea is for banks to build up the loss-absorbing cushions outside periods of stress, to be drawn down if losses are incurred in the future.
