Following the Civil War, national banking charters were authorized by the National Banking Act, setting in place what we now call the dual banking system. Over the ensuing decades, the regulatory structure for banks was further shaped by financial crises, including the Great Depression; the creation of a national deposit insurance system; and other forces.
It closely links the regulatory capital requirements with the bank’s risk profile. 2. It improves the ability of supervisors and financial markets to assess capital adequacy  BIS Review 79/2006  1  3. It gives banking organizations stronger incentives to improve risk measurement and management.