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      Question

      Which of the following best describes the core mandate

      of 'Pillar 3' in the Basel Accord?
      A Defining regulatory capital floors for financial institutions. Correct Answer Incorrect Answer
      B Giving supervisory authorities the power to liquidate distressed banks. Correct Answer Incorrect Answer
      C Driving market transparency and discipline through mandatory reporting. Correct Answer Incorrect Answer
      D Aligning banking operations with sustainable development goals. Correct Answer Incorrect Answer
      E Regulating the physical footprint and branch density of commercial banks. Correct Answer Incorrect Answer

      Solution

      Pillar 3 (Market Discipline) requires institutions to publish their risk profiles and capital adequacy ratios so that the public and investors can judge the safety of the institution. The main objective of Pillar 3 (Market Discipline) of the Basel Framework is to enhance financial transparency and safety by requiring banks to publicly disclose key information regarding their capital structure, risk exposures, and risk management processes. This allows market participants to better assess an institution's financial health, thereby promoting sound, market-driven risk management.Β 

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