Countercyclical buffer

(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'.

See also

• Basel III
• Capital buffer
• Capital Conservation Buffer
• Financial Policy Committee
• Procyclical
• Countercyclical
• Macroprudential
• Total Loss Absorbing Capacity