Basel Committee: Guiding principles to operationalize a sectoral countercyclical capital buffer
The Basel Committee on Banking Supervision (Committee) has published guiding principles to operationalize a sectoral countercyclical capital buffer (SCCyB).
The SCCyB is a tool that can be used to complement the Basel III countercyclical capital buffer.
While a bank’s additional capital requirements following the activation of the CCyB depend on total risk-weighted assets, the SCCyB allows national authorities to temporarily impose additional capital requirements that directly address the build-up of risks in a specific sector.
The Committee notes that the guiding principles are intended to support the implementation of a SCCyB on a consistent basis across jurisdictions.
Photo Credit: Pixabay