Regulatory Alerts2022-05-17
Capital Review - Part 5 November 2019: Setting the Countercyclical Capital Buffer
The Financial Policy Committee recommends implementing a 1.5% early-set Countercyclical Capital Buffer as part of the 16% Tier 1 capital ratio to provide flexibility for supporting lending during crises. This proposal addresses feedback from submitters and external experts who raised concerns about the operational difficulty of identifying economic cycles and the timing of buffer releases. The Committee argues that despite these risks, the benefits of a flexible buffer outweigh the drawbacks, provided that mitigants are established to prevent inappropriate releases.
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