Prudential Regulation
/ˌpruːˈdɛnʃəl ˌrɛɡjʊˈleɪʃən/
Definitions
- (n.) The framework of laws and regulations designed to ensure the safety, soundness, and stability of financial institutions and the financial system.
Prudential regulation requires banks to maintain sufficient capital to absorb losses.
- (n.) Regulatory measures aimed at protecting consumers by minimizing the risk of financial institution failure and systemic crises.
Prudential regulation protects depositors by enforcing risk management standards.
Forms
- prudential regulation
Related terms
See also
Commentary
Prudential regulation typically focuses on microprudential supervision of individual institutions, distinct from macroprudential regulation which addresses systemic risk across the financial system.
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.