BCBS consultation paper on countercyclical capital buffers – 20/09/10

20 Sep 2010

IBFed has responded to the Basel Committee on Banking Supervision’s (BCBS) recent consultation paper on countercyclical capital buffers.  In doing so, IBFed made a point of stressing that such buffers should be seen as one of a range of measures that could be used to alleviate the risks caused by excessive credit growth.  Other measures which could be equally or more appropriate include forward looking provisioning and more rigorous stress testing within Pillar 2.  The response also suggests that the Basel Committee considers the adoption of a single variable capital buffer in place of the complex system of multiple buffers currently suggested.  A single variable capital buffer would reduce this complexity whilst maintaining the flexibility for the Basel Committee to set the size and dynamics of the buffer by reference to its objectives.

The IBFed response is available here.