How Can a Discretionary Regulation Reduce Moral Hazard

How can a discretionary regulation reduce moral hazard?

A) It requires banks to maintain higher standards such as capital ratios) which makes it costly for banks to pursue excessive risks.
B) It clearly defines the nature of risk and increases the span of regulation which makes any pursuit of risk heavily punishable.
C) It is ambiguous and the bank can never be sure if the regulator will come to its rescue and therefore it provides an incentive for the bank to pursue less risk.
D) It delegates the monitoring to several large shareholders of the bank and therefore tends to reduce the bank's risk taking behavior.
E) none of the above