What is Countercyclical Buffer?
Countercyclical Buffer A variable capital buffer required by regulators during periods of credit growth to protect the banking sector from system-wide risks, as outlined in Basel III.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Countercyclical Buffer” Used in Practice?
Authorities activate the countercyclical buffer when credit expansion poses systemic risks to the financial sector.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Countercyclical Buffer?
A variable capital buffer required by regulators during periods of credit growth to protect the banking sector from system-wide risks, as outlined in Basel III.
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