##anez, a. popov, c. rodriguez d ’ acri and t. vlassopoulos, “ monetary policy and bank stability : the analytical toolbox reviewed ”, working paper series, ecb, forthcoming. [ 4 ] lang, j. h. and forletta, m. ( 2019 ), “ bank capital - at - risk : measuring the impact of cyclical systemic risk on future bank losses ”, macroprudential bulletin, no 9, ecb. [ 5 ] budnik, k. et al. ( 2019 ) “ macroprudential stress test of the euro area banking system ”, occasional paper series, no 226, ecb, july. [ 6 ] kok, c., muller, c. and pancaro, c. ( 2019 ), “ the disciplining effect of supervisory scrutiny on banks ’ risk - taking : evidence from the eu ‑ wide stress test ”, macroprudential bulletin no. 9, ecb. [ 7 ] behn, m., daminato, c. and salleo, c. ( 2019 ), “ a dynamic model of bank behaviour under multiple regulatory constraints ”, working paper series, no 2233, ecb, january. [ 8 ] for a recent application of the 3d model see, for instance, hoerova et al. ( 2018 ), “ benefits and costs of liquidity regulation ”, working paper series, no 2169, ecb, july. see also mendicino, c., nikolov, k., suarez, j. and supera, d. ( 2018 ), " optimal dynamic capital requirements, " journal of money, credit and banking, blackwell publishing, vol. 50 ( 6 ), p. p. 1271 - 1297 and clerc l., derviz, a., mendicino, c., moyen, s., nikolov, k., stracca, l., suarez, j. and vardoulakis, a. p. ( 2015 ), " capital regulation in a macroeconomic model with three layers of default, " international journal of central banking, vol. 11 ( 3 ), pp 9 - 63. [ 9 ] there are currently eight globally important banks in the euro area ( in france, germany, italy, the netherlands and spain ) holding additional buffers of between 1 % and 2 %, and 108

in case of a downturn. however, the ccyb has only been activated by seven of the 19 euro area countries and currently represents, in the aggregate, only 0. 1 % of risk - weighted assets a lack of releasable buffers curbs the countercyclical role of macroprudential authorities. when breaching their combined buffer requirements, banks may uphold capital ratios by disposing assets to avoid the automatic restrictions on dividend distributions. if such behaviour becomes widespread in the event of systemic stress, it can result in a credit crunch, which would aggravate the downturn. this is exactly what we observed in previous crisis episodes, and what we should avoid in the future. macroprudential space in the form of releasable buffers could serve as a potential macro - financial stabilisation in euro area countries. the release of the buffers in a downturn should help banks to sustain the flow of credit. to this end, releasable buffers would first need to be available. in sum, we are in a situation where the overall level of capital requirements is broadly adequate, but the composition may not be optimal. it is therefore important to have a discussion on the need to reallocate capital requirements towards releasable buffers in a capital - neutral manner. other national authorities have had – or are having – similar discussions, such as in the united kingdom and in the united states. to me, such a reallocation appears to make sense in the current environment of heightened uncertainty and risks tilted to the downside. with a reallocation of buffers, cyclical systemic risk factors – common to the entire banking sector – would be covered appropriately by the ccyb. in turn, remaining idiosyncratic bank - specific risks will continue to be covered by microprudential requirements. the reallocation would be capital - neutral because the resulting increase in the ccyb would be offset by a corresponding decrease in other capital requirements, for example in pillar 2, as done by the bank of england. the capital - neutral creation of releasable buffers does not require a regulatory change. indeed, the ccyb is already enshrined in eu law and transposed in the national context. it is used to address cyclical systemic risks that are common to the entire banking sector. to ensure that all relevant risks in the banking sector continue to be appropriately covered calls for continued close cooperation among all relevant