6 Yet one need not subscribe to an exaggerated view of the potential of market discipline in order to believe that there is considerable room for progress in enhancing the transparency of financial firm operations so as to permit better market monitoring.
Indeed, the relatively short shrift given to disclosure requirements in the Basel II process reminds us how supervisors can at times place excessive trust in their own capacities to identify risks and evaluate risk-management capacities. A different kind of market, or at least non-government, discipline should be fostered in the internal corporate policies of financial institutions.