Credit-leading indicator to trigger countercyclical buffer phases: BIS paper
The ratio between credit and GDP is a strong indicator to start building-up countercyclical capital buffers and mitigate the risks of financial distress in the future, according to a Bank for International Settlements paper published on Monday.
Mathias Drehmann, Claudio Borio and Kostas Tsatsaronis, the paper's authors, investigate the performance of different variables, and their suitability as an anchor for setting the level of the countercyclical regulatory capital buffer requirements for
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