Capital requirements, regulation, and supervision

Terms I just pulled up, and they should all have mappings to a simple deposit/loan two color system.

 But, officially, government runs a three color, a triple entry accounting system for bank:'
loan/deposit/profits.  For sandbox mathematicians, that all has to be decomposed into a sequence of two color.  Here is what I mean:

Take FDIC insurance.   It is a separate account, and an investment hedge for banking.  It acts like a savings account.  In the decomposition, take the FDIC distribution generator and have a bot work that against the S&L as a trader, or the FDIC function has to be separated to a number pit, to be estimated. Find the two color equivalent, adding trading pits as necessary.

So the triple entry, the third entry, has to be moved into an account in the balance sheet, and return it to two color.  It is a market design thing, we all will get the hang of it, but we are putting congestion buffers in the sandbox, forcing group operations to be within precision.   The probability tree set gets more complex, the third entry being decomposed.

So, for example, the traditional bankers talk about capital requirements for FDIC issued banks, it is not coming out close to the loan/deposit ratio, because it includes a separate capital paid in account FDIC. So we have to o through a normalization process, mostly translating the one language into the other.

Market design is a big deal, always has been.  The sandbox makes it all a bit easy.

For the group theorists:

The system in the sandbox is different in that it selects the nearest finite log that works, and adapts the group to that.  Vectors conserved in the bit error function.

For regulators:

It is simple, go look at the bit error accumulation. You have choices. The bit error function meets your requirements; the bit error function does not but the deviation is priced and endpoints have red/green; and finally, the pit is a forgery, send in the shoe leather. For completeness, let me mention the fourth regulator option.  The pit has gone through a typical bankruptcy, automated.