Q » Define capital buffers.

06 Dec, 2025

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A » Capital buffers are reserves that banks must hold above the minimum capital requirements to absorb losses during economic distress, ensuring stability and protecting the financial system. These buffers can include regulatory capital, countercyclical buffers, and conservation buffers, all intended to enhance the resilience of banks and mitigate systemic risks. By holding additional capital, banks are better equipped to handle unexpected losses without jeopardizing their solvency or operations.

Michael

06 Dec, 2025

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All Other Answer

A »Capital buffers refer to the excess capital held by financial institutions above the minimum regulatory requirements. They act as a cushion against potential losses, allowing banks to absorb shocks and maintain stability during economic downturns, thereby supporting lending and overall financial stability.

David

06 Dec, 2025

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