the Capital Adequacy Directive (CAD)

The Capital Adequacy Directive (CAD) is a set of European regulations that require banks and financial institutions to maintain a certain level of financial strength, called capital. This ensures they can absorb losses and continue operating during economic difficulties, protecting depositors and the wider economy. Essentially, CAD sets rules for how much reserve capital banks must hold relative to their risks, promoting stability and sound management within the financial sector.