to set aside capital above this minimum level to provide an element of reserve. Supervisors will be empowered to require a bank to raise its capital level above the stipulated minimum. Finally, supervisors are instructed to con- stantly review the capital levels of banks under their authority, and act accordingly in good time so that such levels do not fall below a level deemed sufficient to support an individual banks business activity.   Pillar 3-Disclosure The Basel II accord sets out rules on core disclosure that banks are required to meet, and which supervisors must enforce. In addition there are supplementary disclosure rules; these differ from core rules in that banks have more flexibility on reporting them if they are deemed not rele- vant to their specific operating activities, or of they are deemed non-mate- rial. The disclosures include:   capital: the elements that make up the banks capital, such as the types of instruments that make up the Tier 1 and Tier 2 capital;   capital adequacy: this covers the amount of capital required against credit, market and operational risk, as well as capital require- ments as a percentage of the total capital of the bank;   risk exposure: the overall risk exposure of a bank, as measured by credit risk, market risk, operational risk, and so on. Hence this would include profile of the ALM book, including maturity pro- file of the loan book, interest-rate risk, other market risk, essen- tially the sum of the exposures measured and monitored by a banks risk management department.   As part of Pillar 3, banks using an IRB approach when calculating their capital requirement are required to disclose their internal policies and procedures used as part of the approach. In compiling the new Accord, the Basel committee wished to expand capital requirements to cover other areas of risk, such as market risk and     operational risk. It recognizes that a banks capital should reflect the level of risk of its own portfolio, but also that this may best be estimated by a banks own internal model rather than any standard ruling provided by a body such as the BIS. In any event the proposed rule changes have attracted considerable comment and the final form of the rules that are eventually adopted may bear little resemblance to the proposals listed above. There is a growing consensus among practitioners that perhaps the markets themselves