The initial phase of the Basel III framework was designed to improve the banking sector's ability to absorb shocks arising from financial and economic stress. A major component of this reform was improving both the quality and quantity of the regulatory capital base. Under the previous Basel II guidelines, the minimum Tier 1 capital ratio was 4% of risk-weighted assets (RWAs). Under the Basel III framework, this requirement was increased to 6% to ensure banks maintain a higher level of high-quality capital to cover unexpected losses. Furthermore, the Common Equity Tier 1 (CET1) minimum requirement was raised from 2% to 4.5%.