It is far from a panacea, subject as it is to arbitrage and dependent as it is on supervisory rigor. That is perhaps why Congress has also required enhanced prudential standards in other areas such as liquidity, concentration of counterparty exposures, and risk management. But, I would say in conclusion, capital requirements are integral to both microprudential and macroprudential regulation.
First, a general provision was made as a fixed percentage of credit growth. This intends to account for losses incurred on an average on a homogeneous portfolio without specifically identifying the suspect loans. Second, specific provisions for delinquent assets i.e., incurred losses on individual loans were made which depended on the level of risk of the loan and on the time overdue.