See Bank for International Settlements (1996a). BIS Review 62/1998  -3-  Better and cheaper communications have also contributed materially to the breakdown of sectoral and national distinctions in international financial markets, as well as to the growing participation of a whole host of new players.
However, such savings would be subject to conditions: such as requirement that regulatory capital should be higher than economic capital 4 and presence of regulations such as leverage ratios which may prevent banks from reducing their regulatory capital significantly. The McKinsey’s research identifies four important Basel II-related risk-management efficiencies which could together raise pretax earnings by 3 to 6 percent.