Governor Susan Schmidt Bies of the Federal Reserve System of the USA has described the objectives of Basel II a little more elaborately in the following words: “The major objectives of Basel II include creating a better linkage between the minimum regulatory capital and risk, enhancing market discipline, supporting a level playing field in an increasingly integrated global financial system, establishing and maintaining a minimum capital cushion sufficient to foster financial stability in periods of adversity and uncertainty, and grounding risk measurement and management in actual data and formal quantitative techniques.
We are aware that there is some contention around how to deal with this issue, but we are also firmly convinced that there cannot be any more room for complacency.