What does the Basel III framework aim to improve?

The Basel III framework primarily aims to enhance the stability and resilience of the banking sector by establishing stricter requirements for bank capital and risk management. This global regulatory framework was developed in response to the financial crisis of 2007-2008, with the goal of addressing the weaknesses that were exposed during that period.

Under Basel III, banks are required to maintain higher levels of capital relative to their risk-weighted assets, which serves as a buffer to absorb potential losses. This emphasis on maintaining adequate capital ensures that banks have the financial strength to withstand economic shocks, thereby promoting greater confidence in the financial system as a whole.

Additionally, Basel III introduces measures to improve risk management practices within banks. It encourages institutions to adopt more robust risk assessment frameworks and to manage various types of risks, including credit risk, market risk, and operational risk. By fostering better risk management, the framework seeks to reduce the likelihood of financial instability and protect depositors.

The other options, while relevant to banking operations, do not align with the primary objectives of Basel III. For example, customer service standards, loan approval processes, and banking technology infrastructure, while important aspects of banking operations, do not directly relate to the framework's focus on capital requirements and effective risk management practices.