RBI paper suggests alternative to Basel capital buffer


A working paper, published by the Reserve Bank of India on June 27, examines the use of the debt-to-GDP ratio to set the countercyclical capital buffer as suggested by the Basel Committee on Banking Supervision, and argues that it is imperfect when applied to the Indian case.

The authors, Tulasi Gopinath and AK Choudhary, consider the deviation of the debt-to-GDP ratio from its trend since 1950, finding very little movement until 2003 when a large gap emerges. The authors argue that this limited

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