Regulatory Alerts2022-05-17
Role of the countercyclical capital buffer in the capital framework
Macro Financial, in a memorandum to the FSO Committee, recommends retaining the counter-cyclical capital buffer (CCyB) in the New Zealand capital framework and seeks in-principle decisions on its operation. The document proposes that the Committee agree to an "early strategy" for setting the CCyB, which involves building it towards a prescribed neutral level to increase the usability of through-the-cycle capital buffers. This neutral CCyB will be calibrated based on desired through-the-cycle settings, with banks building it up alongside other capital increases, and Macro Financial will develop updated operational guidance.
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