The risk-based approach to capital allocation will  4  BIS Review 42/2006  be the inherent theme, as each asset will be allocated a rating both externally and internally. This will ultimately influence the capital charge for each asset and would thus help minimize the reckless risktaking by banks on account of the heavy capital charge.
As financial innovation becomes ubiquitous and new technology and standards evolve to make financial transactions more complex and volatile, the role of the regulators is going to become tougher in the days ahead. This brings me to the concluding, but not the least important section, i.e. the changing role of and expectations and demands for regulators.