‘Sectoral’ counter-cyclical buffer could boost resilience, says Basel Committee

The Bank for International Settlements, Basel
Photo: Ulrich Roth

The Basel Committee on Banking Supervision has set out guidance on a “sectoral counter-cyclical capital buffer” (SCCyB) that it says could be a useful, targeted tool for policy-makers to deploy.

While the adoption of such a tool is not a part of Basel III and is therefore voluntary, the BCBS says it could be a versatile tool for dealing with narrow imbalances. The document notes that while targeted macro-prudential tools do exist, they are often limited to certain sectors, notably real estate.

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