Critics also argue that an explicit Pillar I capital charge would upset the competitive balance with nonbank and foreign bank competitors. Foreign regulators, it is argued, will be less aggressive in their rule enforcement than U.S. regulators. As I earlier suggested, Pillar III - disclosure - will highlight any significant differences across banks, in the expectation that counterparties will penalize inconsistent risk measures.
In addition, the Basel Supervisors Committee has set up an implementation group of senior supervisors to coordinate the application of the rules across countries. As for nonbanks, the argument ignores the significant edge banks will continue to have from access to the discount window and the Federal Reserve's payments system. This competitive edge attracts customers and lowers funding costs relative to nonbanks.