Capital buffer requirements included in the macroprudential toolkit are supporting the risk-bearing capacity of banks
Topi, Jukka (09.06.2023)
JulkaisusarjaBank of Finland. Bulletin
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi-fe2023061354654
Capital buffer requirements imposed on banks are among the key instruments available in the macroprudential policy toolkit. They safeguard the risk-bearing capacity of banks. Some of the requirements are imposed on the basis of the structural features of banks or the financial system. The countercyclical capital buffer (CCyB) requirement, in turn, is set on the basis of cyclical conditions. It can be relaxed in difficult economic conditions, if necessary, and thereby support bank lending. To ensure there is scope for lowering the CCyB requirement, it should be possible to set the requirement above zero already at the neutral phase of the credit cycle.
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