regulations may sound boring - but they're crucial to understand money, liquidity and financial system as a whole

regulations may sound boring - but they're crucial to understand money, liquidity and financial system as a whole

they become fun once contextualized - and govern the rules of credit

i'd suggest starting with Basel III - namely liquidity coverage ratio & capital ratio

start by asking ChatGPT or another LLM with the Basel III PDF(s) attached

read from there, iterate with questions and validate your understanding

you'll probably need to come back to it a few times

don't overthink it, a basic prompt like this one is sufficient

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NOTE: Basel III is legally non-binding

so for a step 2 you'd want to look into the transposed legislations

🇪🇺 EU: Capital Requirements Regulation & Capital Requirements Directive

🇺🇸 USA: split throughout Code of Federal Regulations

(just ask ChatGPT/LLM & read from there 😄)

balance sheet capacity is defined by regulations

in a world dominated by debt refinancing rather than new credit issuance - the ability to take on more assets and liabilities is more important than interest rates

👉 debt rollover capacity is more important than cost of capital