## Key Aspects of Macroprudential Policy - Background Paper

_Policy Papers, June 10, 2013_

## Source details

**Canonical URL:** [Key Aspects of Macroprudential Policy - Background Paper](https://www.imf.org/en/publications/policy-papers/issues/2016/12/31/key-aspects-of-macroprudential-policy-background-paper-pp4804)

## Other formats

- [Markdown version](/en/publications/policy-papers/issues/2016/12/31/key-aspects-of-macroprudential-policy-background-paper-pp4804/index.md)
- [Structured JSON version](/en/publications/policy-papers/issues/2016/12/31/key-aspects-of-macroprudential-policy-background-paper-pp4804/index.json)
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## Bibliographic details
- Published: June 10, 2013
- Series: Policy Papers

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### Summary and Purpose
- The countercyclical capital buffer (CCB) was proposed by the Basel committee to increase the resilience of the banking sector to negative shocks.
- The interactions between banking sector losses and the real economy highlight the importance of building a capital buffer in periods when systemic risks are rising.
- The CCB aims to make banks more resilient against imbalances in credit markets and thereby enhance medium-term prospects of the economy.

### Framework and Design (Basel III)
- Basel III introduces a framework for a time-varying capital buffer on top of the minimum capital requirement and another time-invariant buffer (the conservation buffer).
- In good times when system-wide risks are growing, the regulators could impose the CCB which would help the banks to withstand losses in bad times.

### Key Observations
- Building capital buffers during periods of rising systemic risk is important because of feedbacks between banking sector losses and the real economy.
- Time-varying capital requirements (CCB) complement minimum capital requirements and time-invariant conservation buffers under Basel III.

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## Content in this bundle

- **Key Aspects of Macroprudential Policy--Background Paper; IMF Policy Paper; June 10, 2013**
  - [Key Aspects of Macroprudential Policy--Background Paper; IMF Policy Paper; June 10, 2013 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2013/_061013c.pdf.md){rel="alternate" type="text/markdown"}
  - [Key Aspects of Macroprudential Policy--Background Paper; IMF Policy Paper; June 10, 2013 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2013/_061013c.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/policy-papers/issues/2016/12/31/key-aspects-of-macroprudential-policy-background-paper-pp4804_