##ical capital buffer will come on top as a capital requirement that can be increased in good times and removed in bad times. the countercyclical buffer is to consist of common equity tier 1 capital and will normally be set between 0 and 2. 5 percent of a bank ’ s riskweighted assets. the countercyclical buffer is intended to counteract the procyclical effects of substantial changes in credit and asset prices. the buffer will help contain the risk of deleveraging in bad times. but an increase in the buffer can also dampen rapid credit growth in good times. the effect will depend on banks ’ reaction when the buffer is increased. norges bank will have primary responsibility for elaborating the basis for decisions on the countercyclical capital buffer. in drawing up the basis, the bank will collaborate and exchange relevant information with finanstilsynet ( financial supervisory authority of norway ). the buffer will be set by the ministry of finance. once the regulation is in place, most likely in late summer, norges bank will issue concrete advice to the ministry of finance on the level of the buffer. thereafter, the bank will issue bis central bankers ’ speeches advice on the buffer four times a year. the criteria on which the bank ’ s advice is based were presented in the march monetary policy report. norges bank will present analyses and issue advice on the size of the countercyclical capital buffer in conjunction with the decision basis for monetary policy. the aim is to ensure that the analytical basis is consistent with the formulation of monetary policy. the objectives of the countercyclical capital buffer and the key policy rate are different. the objective of the buffer is to strengthen banks ’ resilience to losses in an economic downturn, while the objective of monetary policy is low and stable inflation over time. the inflation target is weighed against the aim of smoothing fluctuations in output and employment. the new instrument will be taken into account in monetary policy. both the key policy rate and the buffer work through banks ’ responses. the buffer will be set on the basis of an assessment of the risk that financial imbalances may trigger or amplify an economic downturn. capital adequacy requirements, and their effect on bank lending rates, will be one of many factors underlying the monetary policy analysis and interest rate setting. the countercyclical capital buffer will strengthen the resilience of the banking sector during an upturn. it may also,

we shall always see truth in fragments and from different points of vision. ” let me conclude. iitans like you will lead india ’ s race for ideas. the india that you will graduate into is much more capable of using your technological prowess than the india we graduated into. i wish you unlimited ambition, and forecast great success for those of you who continue thinking and challenging. but as you go out in the world, remember our tradition of debate in an environment of respect and tolerance. by upholding it, by fighting for it, you will be repaying your teachers in this great institution, and your parents who worked so hard to send you here. and you will be doing our country a great patriotic service. thank you and good luck. bis central bankers ’ speeches