Although the aim is not to stifle innovation, the framework is also not intended to encourage capital arbitrage. Basel II will evidently bring with it a higher supervisory and compliance burden, because of the Accord’s greater complexity.
The Office for Banks has embraced the principles contained within Basel II and is of the opinion that Basel II is suitable for application in both G10 and non-G10 countries, since it provides a menu of approaches suitable for both sophisticated and the least sophisticated banks.