The Economic Value of Equity (EVE) is a cash flow calculation that takes the present value of all cash flows from assets and subtracts the present value of all cash flows from liabilities.
Unlike earnings at risk and value at risk (VAR), a bank uses the economic value of equity to manage its assets and liabilities. This is a long-term economic measure used to assess the degree of exposure to interest rate risk.
Financial regulators require banks to conduct periodic EVE calculations.