Rather an active dialogue should take place between bank management and supervisors with regard to the optimum levels of capital. Pillar II thus moves the accord beyond a simple ratio-based standard to a more comprehensive approach for assessing the adequacy of capital levels.
The supervisory review of capital called for in pillar II obviously will have resource implications for supervisors around the world and may require significant changes in supervisory cultures and techniques in many countries, both G10 and non-G10. The committee will need to develop guidance for bank supervisors to use when evaluating the adequacy of internal capital assessment processes.