June 22, 2017

BCBS published a document that examines the implementation of countercyclical capital buffer (CCyB) policies by a range of jurisdictions. The document highlights that CCyB policy frameworks differ significantly with respect to their governance structures; the number of indicators used to identify periods of excess credit and systemic risk; the degree of reliance on formal versus judgmental approaches in making CCyB decisions; and their communication and reciprocity practices. It also outlines issues identified in the context of the cross-jurisdiction comparisons.

The identified cross-jurisdictional issues can be further discussed over the medium term, as more experience with the CCyB policy is gained. The document draws on information from a survey conducted by the Basel Committee and the website on CCyB decisions the Committee maintains. It details various national CCyB policy frameworks and operational aspects, underlining the varying discretionary elements of CCyB policy frameworks and practices in different jurisdictions. The review highlights the importance of the implementation imperative of the Basel standards and helps to clarify implementation of domestic CCyB policies. The CCyB, which the Basel Committee introduced in 2010 as part of the Basel III reforms, has the macro-prudential objective of protecting the banking sector from periods of excess aggregate credit growth that have often been associated with a build-up of system-wide risk.

Related Links

Practices in Implementing CCyB Policy (PDF)

CCyB Decisions by Jurisdiction

CCyB Guidance for National Authorities

Keywords: International, BCBS, CCyB, Basel III, Banking