Anticipating changes in bank capital buffer requirements

Josef Schroth

No 2025-27, Staff Analytical Notes from Bank of Canada

Abstract: Time-varying capital buffer requirements are a powerful tool that allow bank regulators to avoid severe financial stress without the cost of imposing very high levels of capital. However, this tool is only effective if banks understand how it is used. I present a model that banks and financial market participants can use to anticipate how time-varying capital buffer requirements change over time.

Keywords: Business fluctuations and cycles; Credit and credit aggregates (search for similar items in EconPapers)
JEL-codes: E E1 E13 E3 E32 E4 E44 (search for similar items in EconPapers)
Date: 2025-12
New Economics Papers: this item is included in nep-inv
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