Capital requirements for banks - myths and facts

Analysis - June 2018 - No. 8

Authors Andreasen, Brian Liltoft; Mølgaard, Pia
Subject Financial regulation; Financial stability; The Systemic Risk Council
Type Analysis
Year 2018
Published 27 June 2018
Capital requirements increase the banks' ability to absorb losses, thereby contributing to the robustness of the banking system. The first part of the analysis looks at the significance of equity capital to banks' weighted funding costs and their ability to meet increased capital requirements. The second part of the analysis describes three new requirements for the banks' composition of liabilities: the countercyclical capital buffer, the minimum requirement for own funds and eligible liabilities, and the completion of Basel III.