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In regard to Basel II minimum capital requirements, which of the following is false?
A
Banks can reduce their capital charge, subject to a limit, if they can demonstrate diversification benefit due to imperfect correlation between the major risk buckets: credit, operational and market risk.
B
Pillar Two explicitly encourages national authorities (supervisors) to supplement Pillar One with additional capital requirements at their discretion if they deem appropriate.
C
Under the advanced/internal approaches, all three risk categories (credit, market, and operational risk) employ value at risk (VaR) concepts.
D
Basel II had no explicit charge for liquidity risk.