same evidence shows that the elasticity linked to the release of the countercyclical capital buffer accumulated during the expansionary phase could be much higher during downturns. in particular, the evidence points out that credit contracts between 3 and 6 percentage points less when the banks enter into the downturn with a level of capital 1 percentage point higher2. these results, mostly reliant on data from the last crisis, are consistent with other studies taking a longer perspective on the impact of capital over the financial cycle. one of these latter studies, which considers around 150 years of financial cycles in spain3, finds that increasing the ccyb by 1 percentage point prior to a credit expansion might reduce that expansion by about 1 percentage point. however, this same increase of the ccyb in the expansionary phase would reduce the credit contraction in a downturn by around 6 percentage points. thus, a potential activation of the ccyb in good times will ensure that the capital buffers are reserved for bad times. this will affect credit significantly at the negative juncture, while not having a large effect either on credit or on gdp in see, for example, “ bank risk taking and capital requirements ”. r. anguren, g. jimenez and j. l. peydro. mimeo, and how effective are capital - based macroprudential measures in taming the macrofinancial cycles? a structural enquiry into spain, e. gerba and j. mancia ( 2017 ). mimeo. empirical evidence with the countercyclical provisions in spain during the credit expansion that preceded the global financial crisis shows that the introduction of additional provisions in an expansive phase of the cycle did not have a material impact on overall credit, although the composition of credit shifted to riskier companies for the most affected banks. in contrast, in the later downturn the previously accumulated provisions provided 5. 5 percentage points of additional credit to non - financial firms and they also had a positive impact on employment and firms ’ survival probabilities ( see macroprudential policy, countercyclical bank capital buffers and credit supply : evidence from the spanish dynamic provisioning experiments ( g. jimenez, s. ongena, j. l. peydro and j. saurina ), journal of political economy, 125 ( 6 ), 2126 - 2177, 2017 ). bank capital, lending booms, and busts. evidence from spain in the

of shock absorption capacity that banks could use in the downward phase of the cycle to continue providing households and firms with the necessary credit flow. in many macroeconomic and financial contexts, the activation of the ccyb will be justified on the basis of the three objectives mentioned by the bcbs simultaneously. this would certainly have been the case in the boom period of the spanish economy before the last financial crisis. however, there might be cases where, based on available data, only one or two of these objectives can warrant the activation of the ccyb. in particular, there have been numerous examples of economic recessions not preceded by excessive credit growth. this promptly begs the question : should these buffers be exclusively built when the credit cycle is in a boom phase, or also when the economy is buoyant, i. e. when the business cycle is expanding? in my view, sound arguments may justify the use of the countercyclical capital buffer to accumulate loss - aborbing capacity in good times to be used in bad times, even when there is no evidence of the emergence of excessive credit growth. the main argument, in my view, stems from the evidence that, even in those situations, when the recession comes, borrowers ’ default rates rise, 5 / 11 negatively affecting the profit and loss account and the capital position of banks. and, when banks do not have a sufficient level of capital to absorb such a deterioration or can not use their capital buffers, they tend to restrict credit and, as a result, deepen the economic recession. besides, there is also some evidence that both the credit and economic cycles are not independent of each other. on the contrary, a relatively stable empirical pattern of lag - lead between both credit and gdp gaps arises : during the initial phase of recoveries the output gap tends to lead the credit gap ; yet when the expansion is firmly in motion, the credit gap leads the output gap. therefore, activating the ccyb when the economic cycle is in expansion might help reduce the likelihood of an excessive credit expansion. moreover, there is also some evidence that the effects on the activation / deactivation of the ccyb in good / bad times are not symmetric. for example, using individual and aggregate information during the introduction of the basel iii requirements, the existing evidence shows that an increase of 1 percentage point in the banks ’ solvency ratio reduces credit growth by between 1 percentage point and 2. 5 percentage points1. this