Adequacy of capital can forestall crises and allow time for remedial action. Thus, enforcing sound capital requirements is at the heart of maintaining a strong system. The first pillar of Basel II is minimum capital requirements for regulated financial institutions. Minimum capital requirements will be derived by examination of credit, market and operational risks.
4 To put things in perspective, total foreign banking claims measured as a share of global GDP have fallen by one-third since 2008, to 39 per cent at the end of 2014.