Resources for Basel II Capital Accord (Basel II)

BASEL II PILLAR 3

www.accountancyireland.ie

The objective of Basel II Pillar 3 is to improve market discipline through effective public disclosure to complement requirements under Pillar 1 and Pillar 2. To that end, Pillar 3 introduces substantial new public disclosure requirements, and will represent a significant increase in the amount of information made publicly available by banks and investment firms around capital structure, capital adequacy, risk management and risk measurement. Máiréad Devine, Director, PricewaterhouseCoopers looks at the implications of these new requirements.

In recent years, there has been a concerted effort in a number of policy contexts to increase and enhance the amount of information institutions reveal in their public statements. While this drive has partly been a reactionary response to a number of both bank and non¬bank incidents of significant misreporting of balance sheet positions, it also represents a proactive initiative by policy makers to strengthen the role of market discipline in the prudential supervision of banks.

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