Pillar 1, Pillar 2, Pillar 3

Pillar 1, Pillar 2, and Pillar 3 are components of the Basel III international banking regulations designed to strengthen banks’ stability. Pillar 1 sets minimum capital requirements based on the types and risks of assets banks hold, ensuring they have enough buffers for losses. Pillar 2 involves supervisory review, where regulators evaluate banks’ internal risk assessments and capital adequacy, allowing for tailored oversight. Pillar 3 emphasizes market discipline through transparent disclosure of a bank’s risks, helping investors and customers make informed decisions. Together, these pillars promote a resilient banking system by balancing minimum standards, supervision, and transparency.