Countercyclical buffer: Difference between revisions
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Countercyclical buffers are imposed under Basel III within a range of 0% to 2.5%, subject to national supervisors' determinations. | 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. | |||
Revision as of 14:46, 11 November 2016
(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%.
