<abstract xmlns="http://www.w3.org/1999/xhtml">
<p>The paper describes the mechanism of overlapping leverage ratio requirement and macroprudential capital buffers and associated implications for the resilience of the banking sector. It examines to what extent capital buffers can be usable to absorb losses in the case of the Czech banking sector and what impact this may have on the lending capacity of the real economy. The non-usability portion of capital buffers in the Czech banking sector amounts to CZK 27 billion (i.e. 24% of the combined capital buffer). The lending potential of the capital buffer decreases by CZK 630 billion to CZK 1.6 trillion due to overlaps under otherwise equal conditions. The results indicate that the leverage ratio requirement may prevent the capital buffers from being fully effective and can reduce created macroprudential space.</p>
</abstract>

The paper describes the mechanism of overlapping leverage ratio requirement and macroprudential capital buffers and associated implications for the resilience of the banking sector. It examines to what extent capital buffers can be usable to absorb losses in the case of the Czech banking sector and what impact this may have on the lending capacity of the real economy. The non-usability portion of capital buffers in the Czech banking sector amounts to CZK 27 billion (i.e. 24% of the combined capital buffer). The lending potential of the capital buffer decreases by CZK 630 billion to CZK 1.6 trillion due to overlaps under otherwise equal conditions. The results indicate that the leverage ratio requirement may prevent the capital buffers from being fully effective and can reduce created macroprudential space.

The New Era of Capital Regulation Complexity

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"The New Era of Capital Regulation Complexity"}

The paper describes the mechanism of overlapping leverage ratio requirement and macroprudential capital buffers and associated implications for the resilience...

The New Era of Capital Regulation Complexity

Published Online: Sep 05, 2023

Page range: 179 - 197

Received: Oct 16, 2022

Accepted: Feb 23, 2023

DOI: https://doi.org/10.2478/jcbtp-2023-0030

Keywords
capital ratio requirement, leverage ratio requirement, overlaps, capital buffers

© 2023 Lukas Pfeifer, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

The New Era of Capital Regulation Complexity

Published Online: Sep 05, 2023

Page range: 179 - 197

Received: Oct 16, 2022

Accepted: Feb 23, 2023

DOI: https://doi.org/10.2478/jcbtp-2023-0030

Keywordscapital ratio requirement, leverage ratio requirement, overlaps, capital buffers

© 2023 Lukas Pfeifer, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
capital ratio requirement, leverage ratio requirement, overlaps, capital buffers