However, the crisis revealed that many international banks needed higher and better quality capital, because there was pervasive underestimation of risk, which created the impression that banking systems around the world were adequately capitalized before the crisis.
The supervisory review process for assessing capital adequacy, and the overall supervisory frameworks for early identification of vulnerabilities also failed because of complex interconnectedness between financial institutions and markets which was difficult to understand without robust macro-prudential supervision. The disclosures envisaged in Pillar 3 also proved to be insufficient in the light of the complexity of financial instruments and the information asymmetries generated.