Version status: Applicable | Document consolidation status: Updated to reflect all known changes
Version date: 1 January 2014 - onwards
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Article 5 Definitions specific to capital requirements for credit risk

For the purposes of Part Three, Title II, the following definitions shall apply:

(1) "exposure" means an asset or off-balance sheet item;

(2) "loss" means economic loss, including material discount effects, and material direct and indirect costs associated with collecting on the instrument;

(3) "expected loss" or "EL" means the ratio of the amount expected to be lost on an exposure from a potential default of a counterparty or dilution over a one-year period to the amount outstanding at default.