Regulatory Alerts2000-07-20
Principle I concerning the Capital of Institutions
Issued by the Deutsche Bundesbank, this regulation establishes binding rules for assessing the adequacy of an institution's own funds relative to its weighted risk assets and market risk positions. It mandates a minimum 8% ratio of liable capital to risk assets at the close of each business day, while permitting institutions to calculate market risk charges using either marking-to-market or original exposure methods. The framework further standardizes capital consolidation for financial groups, defines precise risk weightings for derivatives and off-balance-sheet transactions, and recognizes bilateral netting agreements to reduce overall capital requirements.
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