Shelter from the storm: recent countercyclical capital buffer (CCyB) decisions

Domagoj Babić and Stephan Fahr

Macroprudential Bulletin, 2019, vol. 7

Abstract: When living by the ocean, instead of trying to calm the waves and tides, building a levee or a breakwater is the safest option. This article reviews the country-specific strategic choices and decisions regarding timing and calibration of the countercyclical capital buffer (CCyB) in countries participating in the Single Supervisory Mechanism (SSM). It identifies commonalities across countries and country specificities that influence decisions by national designated authorities. In so doing, it summarises the limitations encountered with the credit-to-GDP gap and the role of other indicators and factors in calibrating the appropriate CCyB rate on the basis of “guided discretion”. Ultimately, assessing risks across euro area countries consistently, while taking into account country-specific factors, supports the effective use of the CCyB as a macroprudential instrument and ensures that similar risk exposures are subject to the same set of macroprudential requirements. JEL Classification: G21, G28, E58, F42

Keywords: countercyclical capital buffer; Financial stability; macroprudential policy; SSM (search for similar items in EconPapers)
Date: 2019-03
Note: 373346
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Citations: View citations in EconPapers (5)

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