Regulatory-defined capital and required leverage ratios are based in whole or in part on

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Regulatory-defined capital and required leverage ratios are based on book value accounting concepts, which include common equity Tier 1 capital, Tier 1 capital, and total capital, rather than market value accounting concepts. The net worth concept is also relevant to regulatory capital requirements, but it is not the sole basis for determining capital adequacy ratios. The economic meaning of capital is important in understanding the role of capital in bank operations, but it is not a direct factor in regulatory capital requirements.

Regulatory-Defined Capital and Required Leverage Ratios Are Based in Whole