📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    The Basel III framework introduced a new capital buffer

    called the Countercyclical Capital Buffer (CCyB). What is its primary purpose?
    A To protect banks against losses from market risk. Correct Answer Incorrect Answer
    B To ensure banks have capital to absorb losses during periods of excessive credit growth. Correct Answer Incorrect Answer
    C To provide capital for operational risk. Correct Answer Incorrect Answer
    D To maintain liquidity during a crisis. Correct Answer Incorrect Answer

    Solution

    The Countercyclical Capital Buffer (CCyB) is designed to ensure that banking sector capital requirements take account of the macro-financial environment in which banks operate. It is accumulated during periods of high credit growth to be drawn down during periods of stress, thereby promoting resilience.

    Practice Next
    More Banking Operations Questions
    ask-question