International Financial Markets
Risk-weighted assets (RWAs) are a measure used to assess the risk associated with a bank's assets by assigning different risk weights to different types of assets. This concept is crucial for determining the capital requirements that banks must hold to safeguard against potential losses, reflecting the varying degrees of risk inherent in each asset type. The calculation of RWAs is central to ensuring that banks maintain adequate capital reserves, especially in the context of international banking regulations and capital adequacy frameworks.
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