Capital Requirement System

Capital Requirement is the standardized requirements in position for banks as well as other depository institutions, which determines simply how much liquidity is required to be held for any certain level regarding assets through regulatory agencies such as Bank for Global Settlements, Federal Deposit Insurance Corporation or Federal Reserve Aboard. These requirements are place into place to make sure that these institutions are not participating or positioning investments that increase the risk of default and they have enough money to sustain managing losses while still honoring withdrawals.