COPENHAGEN, Dec 20 (Reuters) - Denmark’s Systemic Risk Council on Wednesday advised the government to impose a countercyclical capital buffer requirement for Danish banks.
“It is the assessment of the Council that risks are building up in the financial system,” it said in a statement.
A buffer of 0.5 percent was proposed from March 31, 2019.
The buffer aims to force banks to accumulate extra capital during boom periods on top of capital requirements set through other regulations. The buffer can be unwound during downturns, enabling banks to continue lending and hence soften the impact of a recession. (Reporting by Teis Jensen, editing by Terje Solsvik)