Minimum capital requirements

Minimum capital requirements are the regulatory standards that ensure financial institutions, like banks, have enough financial resources to absorb potential losses and remain stable. These requirements serve as a safety buffer, helping prevent bank failures that could harm customers and the economy. Essentially, regulators set a minimum amount of capital (funds or assets) that a bank must hold relative to its riskier activities. This helps promote the bank's resilience, protect depositors, and maintain trust in the financial system.