A residual benefit of such evaluations will be that supervisors will more easily stay current with evolving industry practices related to risk management and will better understand the risks that individual banks face.
The third element of the proposed new capital framework - pillar III - relates to market discipline, which I believe all supervisors recognize as a critical complement to their supervisory oversight process. When banks disclose timely and accurate information about their capital structure and risk exposures, market participants can better evaluate their own risks in dealing with such institutions.