Capital Adequacy
/ˈkæpɪtl əˈdɛkwəsi/
Definitions
- (n.) A regulatory standard ensuring that a financial institution holds sufficient capital to absorb potential losses and protect depositors.
Banks must maintain adequate capital adequacy ratios to comply with regulatory requirements.
Forms
- capital adequacies
Commentary
The term primarily applies in banking regulation to assess financial soundness; drafting typically focuses on specifying quantitative thresholds and measurement methodologies.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.