The three pillars of Basel II are minimum capital requirements, supervisory review and which third pillar?
- A.Deposit insurance
- B.Market discipline
- C.Liquidity coverage
- D.Asset classification
Show answer
The third pillar works through disclosure: a bank must publish enough about its risk profile, capital and risk management for depositors, investors and rating agencies to judge it, so that the market itself exerts pressure for prudent behaviour.
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