4  BIS Review 25/2006  Basel II can also provide supervisors with a more conceptually consistent and more transparent framework for assessing the linkage of risk and capital over time at our most complex institutions; identifying which institutions have deficiencies; and, ultimately, evaluating systemic risk in the banking system.
Therefore, Basel II establishes a more coherent relationship between how supervisors assess regulatory capital and how they supervise the banks, enabling examiners to better evaluate whether banks are holding prudent capital levels, given their risk profiles, and to better understand differences across institutions.