Answer: Economic capital.

**Economic capital** refers to the amount of capital that a bank, based on its own internal models and risk assessments, determines it needs to maintain to cover potential losses over a certain time horizon at a given confidence level. This is distinct from: - **Regulatory capital**: The minimum capital required by regulators - **Equity capital**: The actual equity funds available - **Financial capital**: A broader term encompassing all financial resources Economic capital represents the bank's internal view of the capital needed to support its risk-taking activities.

Author: LeetQuiz Editorial Team