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      Question

      The Basel III capital regulations are based on which of

      mutually reinforcing Pillars
      A minimum capital requirements Correct Answer Incorrect Answer
      B supervisory review of capital adequacy Correct Answer Incorrect Answer
      C market discipline Correct Answer Incorrect Answer
      D both a and b Correct Answer Incorrect Answer
      E all of the above Correct Answer Incorrect Answer

      Solution

      The Basel III capital regulations continue to be based on three-mutually reinforcing Pillars, viz. minimum capital requirements, supervisory review of capital adequacy, and market discipline of the Basel II capital adequacy framework. Under Pillar 1, the Basel III framework will continue to offer the three distinct options for computing capital requirement for credit risk and three other options for computing capital requirement for operational risk, albeit with certain modifications /enhancements. These options for credit and operational risks are based on increasing risk

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