Overview

risk-adjusted assets


Show Summary Details

Quick Reference

The assets, shown on the balance sheet of a bank, that have had a risk weighting applied to them. Since 1922 banks have been required to hold capital adequacy ratios that take account of the different weights of risk attached to loans, foreign exchange, government securities, cross-border loans, and mortgages. The system also takes account of assets that are held off the balance sheet, such as letters of credit, interest-rate swaps, and currency options, which also have to have risk weightings applied to them. Major changes were brought about in 1992 through the Bank for International Settlements; these are likely to affect the calculation and measurement of a bank's capital adequacy position when fully formulated. The system has been altered by the Basle Market Risk Amendment and Basle Two but risk-adjusted assets are still an important element in banking regulation.

Subjects: Economics.


Reference entries

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.