Compared with the current framework, Basel II is more able to accommodate new products and transaction types and to provide meaningful capital measures for the risks embedded therein. As the central bank and the supervisor of banks, bank holding companies, and financial holding companies, the Federal Reserve is committed to ensuring that the Basel II framework delivers a strong and risk-sensitive base of capital.
The tougher fiscal rules were also intended to help restore confidence on the capital market, in an attempt to curb the increase in risk premiums. As time went on, the risk premiums did in fact fall.