But the overall quality of both the supervisors' and each bank's assessments of capital adequacy should improve greatly under Basel II because of the expanded information that will be available from Pillar 1, from supervisory reviews of a bank's systems for implementing Pillar 1 and Pillar 2, and from the bank's own analyses.
Under Pillar 3, banks will be required to disclose to the public the new risk-based capital ratios and more-extensive information about the credit quality of their portfolios and their practices in measuring and managing risk. Such disclosures should make banks more transparent to financial markets, thereby improving market discipline.