Countercyclical buffer: Difference between revisions
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(CCyB). | (CCyB). | ||
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. | ||
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The rate initially set by the UK's Financial Policy Committee (FPC) for the UK exposures of institutions incorporated in the UK was 0%. | 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'. | |||
Revision as of 14:47, 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%.
Sometimes written 'CounterCyclical Buffer'.
