Central Bank considers capital buffer for lenders

The capital buffer guards against banks’ boosting lending in a boom and slashing it in a crash.

The Central Bank expected to rebuild the counter-cyclical capital buffer “gradually” through 2022 given the Irish economic outlook, it said in November.

The Central Bank is weighing whether to reinstate a capital buffer for banks it removed during the pandemic, amid a worsening economic outlook driven by the war in Ukraine. 

The capital buffer, or CCyB, guards against banks’ boosting lending in a boom and slashing it in a crash. It’s designed to be built up when risks are growing, and allows banks to lend more during times of stress.