Financial Awareness - Risk, Stability & Emerging Finance
Basel III introduced which of the following buffers to protect banks against periods of excess credit growth?
Basel III introduced which of the following buffers to protect banks against periods of excess credit growth?
easy Q1 of 15
Step-by-Step Solution
Step 1: Understand Basel III buffer types
Basel III introduced several capital buffers to enhance bank resilience, including the Capital Conservation Buffer and Countercyclical Capital Buffer.Step 2: Identify buffer for excess credit growth
The Countercyclical Capital Buffer is specifically designed to protect banks during periods of excessive credit growth by requiring additional capital.Final Answer:
Countercyclical Capital Buffer → Option BQuick Check:
Buffer for excess credit growth = Countercyclical Capital Buffer ✅
Quick Trick: Countercyclical buffer = extra capital in credit booms.
Common Mistakes:
- Confusing Capital Conservation Buffer with Countercyclical Buffer.
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