Countercyclical buffer: Difference between revisions
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A macroprudential [[capital adequacy]] requirement for a capital cushion to allow and compensate for procyclical effects. | A macroprudential [[capital adequacy]] requirement for a capital cushion to allow and compensate for procyclical effects. | ||
Countercyclical buffers are imposed under Basel III within a range of 0% to 2.5%. | Countercyclical buffers are imposed under Basel III within a range of 0% to 2.5%, subject to national supervisors' determinations. | ||
The idea is that the buffer is: | |||
*Built up during times when economic conditions are favourable; and | |||
*Reduced during a downturn, to free up capital. | |||
The rate initially set by the UK's Financial Policy Committee (FPC) for the UK exposures of institutions incorporated in the UK was 0%. | |||
Sometimes written 'CounterCyclical Buffer'. | |||
== See also == | == See also == | ||
* [[Basel III]] | * [[Basel III]] | ||
* [[ | * [[Capital buffer]] | ||
* [[Capital Conservation Buffer]] | * [[Capital Conservation Buffer]] | ||
* [[Financial Policy Committee]] | |||
* [[Procyclical]] | * [[Procyclical]] | ||
* [[Countercyclical]] | * [[Countercyclical]] | ||
* [[Macroprudential]] | * [[Macroprudential]] | ||
* [[Total Loss Absorbing Capacity]] | * [[Total Loss Absorbing Capacity]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:The_business_context]] | |||
[[Category:Manage_risks]] | |||
Latest revision as of 16:08, 24 March 2020
(CCyB).
A macroprudential capital adequacy requirement for a capital cushion to allow and compensate for procyclical effects.
Countercyclical buffers are imposed under Basel III within a range of 0% to 2.5%, subject to national supervisors' determinations.
The idea is that the buffer is:
- Built up during times when economic conditions are favourable; and
- Reduced during a downturn, to free up capital.
The rate initially set by the UK's Financial Policy Committee (FPC) for the UK exposures of institutions incorporated in the UK was 0%.
Sometimes written 'CounterCyclical Buffer'.
