Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333541 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 269
Publisher: 
Oesterreichische Nationalbank (OeNB), Vienna
Abstract: 
Since 2014, several countries have implemented the Basel III countercyclical capital buffer (CCyB) to enhance the banking sector's resilience against risks arising from excessive credit growth. We analyze the CCyB decision-making process of macroprudential authorities across Europe. Our findings indicate that macroprudential authorities neither follow the Basel Committee on Banking Supervision (BCBS) guide, based on the credit-to-GDP gap, nor do they rely on the variables recommended by the European Systemic Risk Board when setting the CCyB rate. However, we demonstrate that had the BCBS CCyB guide been applied prior to the global financial crisis of 2007-2008, capital reserves within the European banking sector would have been sufficient to cover the 240 billion euros in government support used to stabilize financial institutions. Our results show that CCyB decision rates are predominantly influenced by a positive cycle-neutral CCyB approach and the funding structure of banking supervision.
Subjects: 
Countercyclical capital buffer
Macroprudential policies
Financial cycles
JEL: 
E32
E58
E61
G21
G28
Document Type: 
Working Paper

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