Norges Bank governor heralds countercyclical capital buffer

oeystein-olsen-norges

While it is hard to imagine instruments that can fully prevent financial crises from developing, it is appropriate to increase banks' resilience to losses when systemic risk increases, Norges Bank governor Øystein Olsen said in a speech yesterday, explaining this is the "primary purpose" behind Norway's decision to introduce countercyclical capital buffers.

"The insurance premium banks pay for the deposit guarantee bears little relation to the risk the bank takes. In addition, since investors

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