This was followed up with the draft guidelines for the Basel II framework in February 2005 where the methodology for computing the capital requirement under the Basic Indicator Approach was explained to banks. Even at the system level, we find that the CRAR of banks is at present well over 12 per cent.
Where the rising dollar is harmful is in reinforcing the widely held view that you cannot go wrong in buying US assets – if their value goes down, at least you will gain on the exchange rate. This sort of thinking does distort capital flows and can lead to misalignments in asset markets.