Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
2Activity
0 of .
Results for:
No results containing your search query
P. 1
Basel III CounterCyclical Buffer

Basel III CounterCyclical Buffer

Ratings: (0)|Views: 347 |Likes:
Published by George Lekatis
Basel III Counter Cyclical Buffer.

Basel iii Compliance Professionals Association (BiiiCPA)
http://www.basel-iii-association.com

The Basel iii Compliance Professionals Association (BiiiCPA) is the largest association of Basel iii Professionals in the world. It is a business unit of the Basel ii Compliance Professionals Association (BCPA), which is also the largest association of Basel ii Professionals in the world.

Receive (at no cost) the New Member Orientation newsletters:
http://www.basel-iii-association.com/New_Member_Orientation_Newsletters.html

Subscribe to Receive (at no cost) Basel II / Basel III Related News, Alerts, Opportunities, Updates, our Monthly Newsletter and Limited Time Offers for our Basel II / Basel III Training and Certification Programs:
http://forms.aweber.com/form/42/1586130642.htm
Basel III Counter Cyclical Buffer.

Basel iii Compliance Professionals Association (BiiiCPA)
http://www.basel-iii-association.com

The Basel iii Compliance Professionals Association (BiiiCPA) is the largest association of Basel iii Professionals in the world. It is a business unit of the Basel ii Compliance Professionals Association (BCPA), which is also the largest association of Basel ii Professionals in the world.

Receive (at no cost) the New Member Orientation newsletters:
http://www.basel-iii-association.com/New_Member_Orientation_Newsletters.html

Subscribe to Receive (at no cost) Basel II / Basel III Related News, Alerts, Opportunities, Updates, our Monthly Newsletter and Limited Time Offers for our Basel II / Basel III Training and Certification Programs:
http://forms.aweber.com/form/42/1586130642.htm

More info:

Categories:Types, Business/Law
Published by: George Lekatis on Mar 26, 2011
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

06/14/2013

pdf

text

original

 
 
Basel iii Compliance Professionals Association (BiiiCPA)www.basel-iii-association.com
1
Basel iii Compliance Professionals Association (BiiiCPA)
1200 G Street NW Suite 800 Washington, DC 20005-6705 USA Tel: 202-449-9750 Web: www.basel-iii-association.com
Basel III: The Countercyclical buffer
 
A. IntroductionLosses incurred in the banking sector can be extremely large when adownturn is preceded by a period of excess credit growth.These losses can destabilise the banking sector and spark a vicious circle,whereby problems in the financial system can contribute to a downturn inthe real economy that then feeds back on to the banking sector.These interactions highlight the particular importance of the bankingsector building up additional capital defences in periods where the risksof system-wide stress are growing markedly.The countercyclical buffer aims to ensure that banking sector capitalrequirements take account of the macro-financial environment in whichbanks operate.It will be deployedby national jurisdictionswhen excess aggregate creditgrowthis judged to be associated with a build-up of system-wide risk toensure the banking system has a buffer of capital to protect it againstfuture potential losses.This focus on excess aggregate credit growth means that jurisdictions arelikely to only need to deploy the buffer on an infrequent basis.The buffer for internationally-active banks will be a weighted average of the buffers deployed across all the jurisdictions to which it has creditexposures.
 
 
Basel iii Compliance Professionals Association (BiiiCPA)www.basel-iii-association.com
2
This means that they will likely find themselves subject to a small bufferon a more frequent basis, since credit cycles are not always highlycorrelated across jurisdictions.The countercyclical buffer regime consists of the following elements:(a) National authorities will monitor credit growthand other indicatorsthat may signal a build up of system-wide risk and make assessments of whether credit growth is excessive and is leading to the build up of system-wide risk.Based on this assessment they will put in place a countercyclical bufferrequirement when circumstances warrant.This requirement will be released when system-wide risk crystallises ordissipates.(b) Internationally active banks will look at the geographic locationof their private sector credit exposures and calculate their bank specificcountercyclical capital buffer requirement as a weighted average of therequirements that are being applied in jurisdictions to which they havecredit exposures.(c) The countercyclical buffer requirement to which a bank is subject willextend the size of the capital conservation buffer.Banks will be subject to restrictions on distributions if they do not meetthe requirement.
 
 
Basel iii Compliance Professionals Association (BiiiCPA)www.basel-iii-association.com
3
B. National countercyclical buffer requirementsEach Basel Committee member jurisdiction will identify an authoritywith the responsibility to make decisions on the size of thecountercyclical capital buffer.If the relevant national authority judges a period of excess credit growthto be leading to the build up of system-wide risk, they will consider,together with any other macroprudential tools at their disposal, putting inplace a countercyclical buffer requirement.This will varybetween zero and 2.5% of risk weighted assets,dependingon their judgement as to the extent of the build up of system-wide risk.The document entitled Guidance for national authorities operating thecountercyclical capital buffer, sets out the principles that nationalauthorities have agreed to follow in making buffer decisions.This document provides information that should help banks tounderstand and anticipate the buffer decisions made by nationalauthorities in the jurisdictions to which they have credit exposures.To give banks time to adjust to a buffer level, a jurisdiction willpre-announce its decision to raise the level of the countercyclical bufferby up to 12 months. Decisions by a jurisdiction to decrease the level of the countercyclicalbuffer will take effect immediately.The pre-announced buffer decisions and the actual buffers in place for allCommittee member jurisdictions will be published on the BIS website.

Activity (2)

You've already reviewed this. Edit your review.
1 thousand reads
1 hundred reads

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->