A financial institution which does not accept public capital because of its financial soundness might suffer a competitive disadvantage against another institution which accepts public capital, because the sound institution has a lower capital adequacy ratio as a result.
Furthermore, if many financial institutions intend to raise regulatory capital adequacy ratios at this juncture in order to avoid such disadvantage, the real economy will be adversely affected. When reviewing financial regulation and supervision in the future, the role of capital regulation will definitely be an important issue on the agenda.