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Financial regulation. Reserve requirements are central bank regulations that set the minimum amount that a commercial bank must hold in liquid assets. This minimum amount, commonly referred to as the commercial bank's reserve, is generally determined by the central bank on the basis of a specified proportion of deposit liabilities of the bank ...
Money multiplier. In monetary economics, the money multiplier is the ratio of the money supply to the monetary base (i.e. central bank money). If the money multiplier is stable, it implies that the central bank can control the money supply by determining the monetary base. In some simplified expositions, the monetary multiplier is presented as ...
Capital requirement. A capital requirement (also known as regulatory capital, capital adequacy or capital base) is the amount of capital a bank or other financial institution has to have as required by its financial regulator. This is usually expressed as a capital adequacy ratio of equity as a percentage of risk-weighted assets.
There are two definitions for the factor of safety (FoS): The ratio of a structure's absolute strength (structural capability) to actual applied load; this is a measure of the reliability of a particular design. This is a calculated value, and is sometimes referred to, for the sake of clarity, as a realized factor of safety.
e. Fractional-reserve banking is the system of banking in all countries worldwide, under which banks that take deposits from the public keep only part of their deposit liabilities in liquid assets as a reserve. Bank reserves are held as cash in the bank or as balances in the bank's account at the central bank. Fractional-reserve banking differs ...
Reserves for a mortgage refer to cash or any other assets you can easily access to pay your loan. If your mortgage lender requires them, these reserves would be in addition to the cash you’d use ...
Basel III is the third Basel Accord, a framework that sets international standards for bank capital adequacy, stress testing, and liquidity requirements. Augmenting and superseding parts of the Basel II standards, it was developed in response to the deficiencies in financial regulation revealed by the financial crisis of 2007–08.
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk etc. In the most simple formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other lenders.