The amount of funds a financial services firm is required to hold as capital by its regulator. Although regulatory capital formulations can differ by jurisdiction, the Basel Committee on Banking Supervision (BCBS), an international organization, sets the regulatory guidelines for how regulatory capital should be calculated. Regulatory capital is a systemic risk management tool that is designed to help prevent individual firms from becoming insolvent, which can have consequences for other firms, as well as for customers, shareholders, and other stakeholders.

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