For capitalization, the definition of capital should be narrowed to include only truly lossabsorbing items such as common equity. Ideally, one would like differentiate with different weights not only the type of asset in general but the specifics of such assets – for example, a mortgage for a low-risk customer should not absorb the same capital as one for a high-risk customer.
In practice, however, this procedure might be cumbersome and most importantly, it would be largely dependent on judgment, despite the sophistication of any model. Hence, it is probably better to seek high standards of capital relative to non-risk-weighted assets including off-balance-sheet exposures; i.e., the total leverage ratio.