kapitaltäckas

Kapitaltäckas is a Swedish term that translates to "capital adequacy" or "capital requirements" in English, particularly in the context of financial institutions. It refers to the minimum amount of capital that banks, insurance companies, and other financial entities are required to hold by regulatory authorities. This capital serves as a buffer to absorb unexpected losses and ensure the stability of the financial system.

The purpose of capital requirements is to protect depositors, policyholders, and the broader economy from the failure of financial institutions. By mandating that firms maintain a certain level of capital, regulators aim to reduce the risk of insolvency and systemic crises. Higher capital levels generally mean a stronger financial institution that is better equipped to withstand economic downturns or market shocks.

Capital requirements are typically calculated as a percentage of a financial institution's risk-weighted assets. This means that assets deemed riskier, such as loans to less creditworthy borrowers or complex financial instruments, will require more capital to be held against them. The specific ratios and methodologies for calculating capital adequacy are determined by national and international regulatory bodies, such as the Basel Committee on Banking Supervision. These regulations are frequently updated to reflect evolving financial markets and emerging risks.