Activation of countercyclical capital buffers in Europe: initial experiences

When there is a downturn in the financial cycle, banks restrict credit in anticipation of an increase in risks and related provisions. Macroprudential authorities have a specific instrument at their disposal to deal with this: the countercyclical capital buffer (CCyB). During favourable periods, the CCyB can be increased to impose additional capital holdings on banks, which can then be used during unfavourable periods to absorb losses and ensure an appropriate supply of financing to the economy. Nevertheless, the concern remains that increasing the CCyB could burden the economy with a cost that far outweighs the expected benefits. These fears are unwarranted however: countries that have activated the CCyB have experienced no negative effects and now have widened the policy space that could respond to potential crises. As a precautionary measure, the French macroprudential authority, the Haut Conseil de stabilite financiere (HCSF – High Council for Financial Stability), recently increased the countercyclical capital buffer in two steps. Quand le cycle financier se retourne, les banques resserrent le credit car elles anticipent une hausse des risques et des provisions a constituer. Face a cela, les autorites macroprudentielles disposent d’un instrument adapte : le « coussin contracyclique » (countercyclical capital buffer ou CCyB). En periode favorable, il peut etre accru pour exiger des banques des fonds propres supplementaires. Ces fonds seront utilises en periode defavorable pour absorber les pertes et maintenir le financement de l’economie. Toutefois, une hausse du CCyB ne risque-t-elle pas de faire supporter a l’economie un cout trop eleve par rapport aux benefices attendus ? Ces craintes ne sont pas justifiees : le CCyB n’a pas entraine d’effets negatifs dans les pays l’ayant active et ceux-ci disposent d’un nouveau levier de politique economique en cas de crise. A titre preventif, l’autorite macroprudentielle en France, le Haut Conseil de stabilite financiere, a recemment augmente ce coussin contracyclique, en deux temps.