Securitisation and Regulation News

Basel Committee consults on countercyclical capital buffer proposal

The Basel Committee on Banking Supervision has published a consultation paper setting out its countercyclical capital buffer proposal. Under the Committee's proposal, the countercyclical buffer would be imposed when, in the view of national authorities, excess aggregate credit growth is judged to be associated with a build-up of system-wide risk.

The Committee is also continuing to review specific proposals to address the risks of systemic banking institutions, including a 'guided discretion' approach for a systemic capital surcharge in combination with other mitigating regulatory and supervisory measures. The Committee intends to publish a proposal for the role of 'gone concern' contingent capital in the regulatory capital framework shortly.

The Basel Committee's oversight body – the Group of Central Bank Governors and Heads of Supervision – will review the Committee's progress and recommendations at its upcoming meeting later in July.

Consultative Document: Countercyclical capital buffer proposal