This article explains, at a very high level, the purpose of maintaining economic capital. It also explains the challenges in estimating the appropriate level of economic capital for a bank or a central bank. Each step in the process of modelling of the economic capital needs to be examined deeply and deliberated with a suitable allowance for errors of judgment. This requires a high level of technical expertise, experience, and humility. Let us hope we do get all of these.
Source: Today Deals