time that the ccyb was used widely in a downturn. among them we can mention france, germany, sweden, switzerland and united kingdom ( bis, october 2022 ). these countries lowered the ccyb either completely or partially. recent reports from the basel committee are also focused on providing empirical evidence regarding buffer usability and cyclicality of the framework. so far, the evidence gathered suggests that although the countercyclical capital buffer may be less effective to contain the build - up phase of the credit cycle. however, it may help to strengthen 1 / 3 bis - central bankers'speeches banks'solvency and mitigate the risk that banks'lending standards amplify an economic downturn as well as all the spillovers implied. several potential reasons have been put forward for the reluctance of banks to use their buffers. among them, the literature highlights : the stigma of the market, the uncertainty around possible future credit losses and the uncertainty around supervisory expectations regarding the restoration of any reserve provision ( hernandez de cos, 2021b ). in the case of chile, this new macroprudential took was incorporated in the latest reform to the general banking law approved in 2018. within the framework of the implementation of basel iii in chile, the bcch was empowered to determine the countercyclical capital requirement to banks. the general banking law gives the central bank of chile the power to determine the activation or deactivation of the countercyclical capital requirement. once the activation decision has been made, the central bank must set its level and deadline for compliance, after a favorable report from the financial market commission. as recommended by the basel committee, this requirement can be established between 0 and 2. 5 % of risk - weighted assets and must be paid entirely with core capital ( cet 1 ), above the minimum capital requirements established by the general banking law. in this context, in 2021 the board of the central bank of chile published a policy framework to implement this capital requirement as a macroprudential tool to preserve the stability of the financial system as a whole, rather than the solvency of a particular bank. in this sense, it reduces the impact of risk materialization on the banking sector and, therefore, on financial stability, avoiding restricting essential services, such as the supply of credit, and protecting the overall economy. the countercyclical capital requirement should be activated or increased before an episode of financial stress materializes, i. e., during periods

rosanna costa : macroprudential policy and the countercyclical buffer opening remarks by ms rosanna costa, governor of the central bank of chile, at the workshop " macroprudential policy and the ccyb ", santiago de chile, 16 december 2022. * * * good morning. i am pleased to welcome everyone to today's workshop on macroprudential policy and the countercyclical buffer. thank you for being here, participating and lending your attention to this important topic. we have gathered a great lineup of speakers, who will address a range of timely and important issues on the matter. in the aftermath of the global financial crisis, banking regulators agreed on an updated set of banking regulations aimed at improving the resilience of the global financial system, highlighting among them the role of new buffers intended to help banks build sufficient resources in normal times so that in a period of stress they can absorb losses and avoid a disruptive reduction of lending. the buffers have two objectives ( basel committee, 2020b ) : first, to ensure that banks absorb losses in times of stress without breaching their minimum requirements ; and second, to keep credit flowing to the real economy in a downturn by lending to creditworthy businesses and households. in december 2010, the basel committee on banking supervision ( bcbs ) published the basel iii framework with the global regulatory standards on bank capital adequacy and liquidity, including a countercyclical capital buffer ( ccyb ). its primary objective would be to protect the banking sector from periods of excessive aggregate credit growth, often associated with the accumulation of systemic risk. in general terms, the ccyb would be activated and increased by authorities whenever aggregate credit growth was judged to be excessive and associated with a build - up of system - wide risk. the buffer can be reduced during a downturn to help ensure that banks maintain the flow of credit in the economy. considering that this is a new macroprudential tool, the evidence of implementations is still limited. notwithstanding that, the number of countries that have developed a policy framework is increasing and the number of jurisdictions that have set a positive buffer level increased significantly over recent years. until now, around forty countries have been using the ccyb, with heterogeneous effects depending on their local conditions and vulnerabilities. furthermore, during the covid - 19 crisis, many countries released their countercyclical capital buffers, marking the first