FED voted to affirm the countercyclical capital buffer (CCyB) at the current level of 0 percent. While making this determination, FED consulted with FDIC and OCC and followed the framework in its policy statement for setting the CCyB for private-sector credit exposures located in the United States. For FED to modify the CCyB amount in the future, banking organizations would have 12 months before the increase became effective, unless FED establishes an earlier effective date.
CCyB is a macro-prudential tool that can be used to increase the resilience of the financial system by raising capital requirements on internationally active banking organizations when there is an elevated risk of above-normal future losses and when the banking organizations are exposed to or are contributing to this elevated risk—either directly or indirectly. The buffer could also help moderate fluctuations in the supply of credit. CCyB is designed to be released to support lending and economic activity more broadly, when economic conditions deteriorate.
Related Link: Press Release
Keywords: Americas, US, Banking, FDIC, OCC, CCyB, Basel III, Macro-Prudential Policy, FED
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