SSC Economics Sample Paper NCERT Sample Paper-4

  • question_answer
    Which are the three pillars of Basel II?

    A)  Credit Risk, capital adequacy, Debt Control

    B)  Risk weighted assets, supervisory review and capital adequacy ratio

    C)  Minimum capital requirement, supervisory review & market discipline

    D)  Capital adequacy, Risk weighted assets and Debt Control

    Correct Answer: C

    Solution :

    [c] Basel II, initially published in June 2004, was intended to amend international standards that controlled how much capital banks need to hold to guard against the financial and operational risks banks face. These rules sought to ensure that the greater the risk to which a bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and economic stability. Basel II attempted to accomplish this by establishing risk and capital management requirements to ensure that a bank has adequate capital for the risk the bank exposes itself to through its lending, investment and trading activities. One focus was to maintain sufficient consistency of regulations so to limit competitive inequality amongst internationally active banks.

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