Countercyclical Capital Buffer as a Macroprudential Instrument and its Implementation in Selected EU Countries

Countercyclical capital buffer has become one of the most important instruments that aim to ensure that banking sector capital requirements take account on the macro-financial environment in which banks operate. In EU it was implemented through the Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms and it has become an important factor that affects cyclical systemic risk by smoothing fluctuations in the credit cycle. The main objective of this study is to show the macroprudential goals of this instrument and mechanisms of its impact on banks. The emphasis will also be put on its methodology and analysis of the existing experience in selected EU countries that decided to activate it. A main research method used in this paper is critical analysis of the literature connected with this subject and reports issued by institutions that form financial safety nets on a national and international level. Results of this research will help to understand current problems connected with this instrument and its perspectives.