Capital Requirements Regulation

The Capital Requirements Regulation (CRR) is a set of rules that financial institutions, like banks, must follow to ensure they have enough capital—funds set aside—to cover potential losses. This helps maintain the stability of the financial system, protect depositors, and prevent bank failures. The regulation defines how much capital banks need based on the riskiness of their assets, encouraging prudent management and reducing the likelihood of financial crises. Essentially, it ensures banks are financially healthy enough to withstand economic shocks and continue to operate safely.