The Bank of England may raise its countercyclical
capital buffer (CCB), forcing institutions to set aside more
reserve funds as the economy improves.
And while many in the industry think the buffer is
important, the British Bankers’ Association (BBA)
believe the safeguard should be used appropriately.
The context is rising credit growth in the UK,
according to the minutes of the Bank of England Financial
Policy Committee’s (FPC) September meeting. This
concerns the FPC: the expansion is seen as an indicator of
increased domestic risks. Policy makers have held the CCB at
zero every quarter since its introduction in 2013.
But reservations remain. "To be effective [the CCB]
will need to be used in a way which is truly counter-cyclical
and which is predictable and transparent for industry and
investors," said a spokesperson for the BBA.
"It is noteworthy that to date the vast majority of
macro-prudential measures introduced...