Banco de España Blog

The countercyclical capital buffer: what is it, why has it been revised and what does it mean for banks?

04/06/2024 Ángel Estrada (Director General Financial Stability, Regulation and Resolution) , Javier Mencía (Head of Macro-prudential Policy Division) and Carlos Pérez Montes (Director)

The countercyclical capital buffer (CCyB) mitigates the risk posed by the macro-financial cycle to the banking system as a whole. The CCyB gradually raises banks’ solvency requirements when this risk is intermediate or high and lowers them when such systemic risks materialise. In so doing, it enhances banks’ loss-absorbing capacity and enables a stable supply of financing to the economy.