Business and Personal Finance Dictionary

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• SOLVENCY RISK
  
  The risk of not being able to cover losses regardless of the source, type, or size of the losses. In a broad sense, solvency is often equated with liquidity risk since ready money is needed to cover losses. However, it is more accurate to say that the ultimate source of funds available to cover losses is capital. Therefore, solvency risk is the risk that the bank will default. Ultimately, it is the risk of bank failure.
  
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