Capital adequacy

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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