A visible intensification of our onsite and offsite inspections of banks over several years has led to enhancing the regulator’s understanding of the precise framework in which banks actually operate. It has also led to a higher degree of appreciation by banks of the objectives behind supervision.
The amount of trust and confidence that this interactive process has generated between the two sides will no doubt have its own positive impact on the ongoing implementation of Pillar Two of Basel 2. Better mutual understanding between the two parties, regulator and banks, will also ward off the risk of over-regulation.