Gjaldþol
Gjaldþol is an Icelandic term that translates roughly to solvency and refers to an entity’s ability to meet its long-term financial obligations. In financial regulation, gjaldþol describes the capacity of institutions such as banks, insurance companies, and pension funds to absorb losses and continue meeting their liabilities even under adverse conditions. It focuses on whether the entity’s capital base and risk controls are sufficient to cover anticipated and unexpected losses over time, rather than short-term cash needs.
Assessment of gjaldþol involves capital adequacy, asset quality, earnings capacity, and risk management. Regulators evaluate whether
Gjaldþol is distinct from liquidity, which concerns an entity’s ability to meet immediate cash outflows. While
In policy terms, maintaining gjaldþol helps protect depositors, policyholders, and the financial system as a whole.