b)  Advanced approaches of Basel Capital Accord  A Working Paper1 published by the Basel Consultative Group recently has cautioned that the banks in EMDEs and small economies could move to the IRB approaches without being ready and respond to higher capital requirements by not revealing and recognising all potential risks associated with their balance sheets.
The higher requirements may create an incentive for banks to use the advanced risk measurement techniques under Basel II to achieve lower implicit risk weights with the same balance sheets, and put pressure on supervisors to approve such practices even if a bank is not ready (eg. by citing reputational concerns).