CBIRC and PBC Establish CCyB Mechanism in China, Set CCyB at 0%
CBIRC and PBC issued a notice establishing the mechanism for countercyclical capital buffer (CCyB), which came into force as of September 30, 2020. The notice specifies the provision methods, coverage, and evaluation mechanism of CCyB in China, by referring to international practices as well as the relevant requirements put forward by BCBS. In line with the current systemic financial risk assessments and pandemic containment needs, the ratio for CCyB shall be initially set at zero and banking financial institutions shall be free from the extra capital management requirements.
CBIRC and PBC will take into consideration factors such as macroeconomic and financial conditions, the level of leverage ratio, and soundness of the banking sector in a comprehensive manner. The requirements for CCyB will be re-evaluated and adjusted on a regular basis to forestall systemic financial risks. The establishment of the mechanism for CCyB serves as a significant move to improve the macro-prudential policy framework and enrich the macro-prudential policy toolkit. It is conducive to further promoting the sound operation of banking financial institutions, enhancing countercyclical adjustments of macro-prudential policies, and cushioning the negative effects of procyclical fluctuations and unexpected shocks of financial risks, with the aim to safeguard the stable operation of the financial system in China.
Related Link (in Chinese): Press Release
Effective Date: September 30, 2020
Keywords: Asia Pacific, China, Banking, CCyB, Basel, Regulatory Capital, Systemic Risk, Macro-Prudential Policy, PBC, CBIRC
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
APRA Initiates Action Against a Bank for Liquidity Compliance BreachRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
