What is Risk-Weighted Assets (RWA)?

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Accepted Answer

Risk-Weighted Assets (RWA) are a bank's assets, both on and off-balance sheet, that are weighted according to their credit, market, and operational risk profiles, serving as the denominator in the calculation of a bank's regulatory capital ratio to ensure financial stability and solvency as mandated by the Basel Accords.

Risk-Weighted Assets (RWA)

What is Risk-Weighted Assets (RWA)?

What are the primary methods for calculating Risk-Weighted Assets under the Basel Framework?

How do Risk-Weighted Assets directly impact a bank's capital adequacy and lending capacity?

Why is the accurate calculation of RWA critical for regulatory compliance, especially concerning AML and KYC?

When did the Basel III "Endgame" reforms significantly change the calculation of Risk-Weighted Assets?

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