Sure that is the regulation, but just because it’s a regulation doesn’t mean it’s all you should do for risk management, it’s just the bare minimum. If the pre

Sure that is the regulation, but just because it’s a regulation doesn’t mean it’s all you should do for risk management, it’s just the bare minimum. If the present value of a bank’s assets are lower than the present value of deposits, that is insolvency: calling it illiquidity just because the bank doesn’t want to sell its actually-liquid underwater assets right now is a cop-out.