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Part III Quantitative Capital Requirements, 13 Capital Conservation Buffer and Countercyclical Capital Buffer

Katerina Lagaria

From: Capital and Liquidity Requirements for European Banks (1)

Edited By: Bart P.M. Joosen, Marco Lamandini, Tobias H. Tröger

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 22 May 2024

Subject(s):
Regulation of banks — Credit risk — Financial regulation — Basel 3 — Capital requirement — Leverage — Liquidity — Basel committee on Banking Supervision

This chapter illustrates the regulatory, legislative, and institutional framework for two capital-based macroprudential instruments: the Capital Conservation Buffer (CCoB) and the Countercyclical Capital Buffer (CCyB). It focuses on the Basel III-inspired EU legislative provisions on capital requirements, which introduced the CCoB and the CCyB for the first time across Member States. The chapter also analyses the specific EU legislative provisions of Directive 2013/36/EU pertaining to these two buffers, along with the relevant amendments introduced in 2019 by means of Directive (EU) 2019/878. It then considers the cyclical and dynamic CCyB, reflecting its more complex setup and discretionary application, compared to the non-cyclical, fixed requirement for the CCoB. Finally, the chapter looks at the allocation of relevant competences and particular tasks assigned to national and supranational authorities/bodies also in light of the major institutional shift marked by the creation of the Banking Union.

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