- Prudential regulation — Regulators
This chapter describes the basic principles of prudential regulation. There is no fixed meaning for the term ‘prudential regulation’. One could define it as a system of laws and regulations aimed at reducing the risk of, and mitigating the consequences of, the failure of financial services firms. More specifically, this book uses the term as a convenient shorthand to refer just to capital adequacy and liquidity requirements, limitations on large exposures, and requirements relating to the supervision and disclosure of the foregoing—although many people would use the term to encompass other regulatory requirements. The chapter then considers the application of prudential regulation to individual entities within groups, with particular focus on bank capital adequacy requirements, or regulatory capital.
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