Importantly, as bankers move forward with implementation, they should not lose sight of Pillars 2 and 3, which may ultimately be more important to the success of Basel II than Pillar 1, which has received the bulk of the attention so far.
Under Pillar 2, banks are required to have an internal process – which will be subject to rigorous supervisory review – for ensuring that they are holding enough overall capital to support their entire risk profile. Thus, Pillar 2 should be a key area of focus for banks implementing Basel II.