Asia bankers reject counter-cyclical capital buffer as effective tool for supervision
The negative impact of the counter-cyclical capital buffer on high-growth countries has reinforced the feeling that the Basel III Accord is biased towards the North American and European banking systems at the expense of Asia
The principle behind Basel III’s counter-cyclical capital buffer (CCB) is simple: credit grew at too rapid a pace in the run-up to the financial crisis, so the Basel rules include a provision requiring banks to put in an additional capital buffer in economic boom times. Based on factors such as the credit-to-GDP ratio the CCB is intended to give regulators a weapon against pro-cyclicality and a defence against system-wide shocks.
But as with other aspects of the Basel Accord – most notably
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