One of the basic features of this regulation is the idea that capital charges required by the regulator should reflect appropriately the risk taken by the banks: they should be risk weighted. Banks that take higher risks should be required to hold more capital.
The major part of the discussion about capital adequacy regulation has so far centered on the appropriate choice of risk weights. In fact a core part of the proposal for the new Basle accord deals with correcting past shortcomings in the choice of these weights.