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"If they are determined to move away from Pillar 1, we need a debate about income insurance or protection when we have got years like 2012.
Pillar 1 requires banks' capital to be at least 8% of risk-weighted assets, the same as now: the weighting system, however, will change.
Pillar 1 is the mathematical bit, the calculation of the amount of capital that banks must set aside for credit risk, market risk and operational risk.
Third, even if a bank's minimum requirements under pillar 1 go down, under pillar 2 its supervisors could still add to the minimum.
Inflated expectations Reprints Related items Bothersome BaselApr 15th 2004To make matters less precise still, during negotiations with bank associations, regulators have been placing less weight on "pillar 1" and more on "pillar 2 Basel-speakk for supervisors' discretion—in order to overcome anomalies produced by the formulas in pillar 1.
The NFU president, Peter Kendall, said they would be used to press Paterson to soften his expressed desire to axe European "Pillar 1" subsidies, which pay farmers a set amount for owning land in production.
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If we fail to find the road to a peace agreement, many more of us will still participate in Defence Pillar 2, Defence Pillar 3, and so on".
Pillar 3 is designed to improve the quality of banks' disclosure on their risk profiles.
Pillar 3 stresses the importance of market discipline, and says that banks should become more open about risks to their capital positions and profitability.
A lot might rest on pillar 2 of the new accord ie, on whether supervisors allow banks to lose a bit of padding during recessions.
Pillar 2 says that banks must plump up their capital cushions if national supervisors consider them too thin, even if they are above the minimum.
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