Risk density and capital requirements inversely related – FSI
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Report says jurisdictions could be choosing between higher capital requirements or model restrictions
Jurisdictions with high risk density in the calculation of risk-weighted assets tend to have lower nominal capital requirements, according to a report by the Bank for International Settlements’ Financial Stability Institute (FSI).
The study examined 29 global systemically important banks (G-Sibs) across seven jurisdictions and found that risk density – measured as risk-weighted assets divided by
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