Question:
a) The first pillar of Basel II provides a range of options for determining the capital requirements for credit risk and operational risk to allow banks and supervisors to select approaches that are the most appropriate for their operations. Comment on the various approaches proposed in the revised framework of Basel II.
b) The Government of Mauritius decides to separate the banking supervisory role from the Central Bank to enable the latter to concentrate on monetary policy. You have been assigned the responsibility to set up an independent supervisory authority for the banking sector. As a key person, you are requested to draft a banking regulatory framework addressing the objectives, functions and the basic principles of banking supervision.