Capitalissues

Capitalissues

Solvency management by the denominators

@cetier1
Aug 14, 2013
∙ Paid

One way a bank can manage its solvency is by changing the denominator of its solvency ratio, in this case of its BIS ratio. (The BIS ratio is the ratio of capital divided by Risk Weighted Assets often refereed to as RWA).

The plot below shows holdings of assets that are categorized as available for sale. These assets are often loans, and they total about…

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