Which of the following are the three main pillars of Basel III?

The three main pillars of Basel III focus on enhancing the regulation, supervision, and risk management within the banking sector. The correct answer highlights:

1. Minimum Capital Requirements: This pillar sets out standards for financial institutions to hold a minimum level of capital based on the risks they face. This ensures that banks can absorb losses and reduce the risk of insolvency.

2. Supervisory Review Process: This pillar emphasizes the need for regulatory bodies to assess how well banks are managing their risks and maintaining adequate capital. It is a proactive measure to ensure that institutions have strong risk governance frameworks and capital planning processes.

3. Market Discipline: This aspect encourages transparency in the banking sector, requiring institutions to disclose key information regarding their risk profiles, financial health, and capital adequacy. Enhanced disclosure is intended to bolster the confidence of investors and customers and promote sound risk management practices.

Understanding these pillars is fundamental for navigating the regulatory landscape that governs the banking industry and ensuring the stability of the financial system.