To continue to perform these functions, banks must have a sufficient level of capital to ensure that they can absorb losses and continue operations during times of stress in the financial system when losses may be significant. 2  The financial crisis showed that pre-crisis bank capital requirements and levels were far short of this standard.
Since then, capital requirements have increased substantially and banks have accordingly increased their capital and greatly improved their ability to understand their risks and plan for their capital 2  -3An important principle of the capital framework is that it must evolve through a continuous process of incorporating new risks that may emerge.