Capital Buffer
/ˈkæpɪtl ˈbʌfə/
Definitions
- (n.) A regulatory capital amount that banks must hold above minimum requirements to absorb losses and reduce the risk of insolvency.
The bank increased its capital buffer to safeguard against potential financial downturns.
- (n.) Additional capital held by a financial institution as a macroprudential tool to protect the economy during systemic stress periods.
Regulators imposed a capital buffer to mitigate systemic risks in the banking sector.
Forms
- capital buffer
- capital buffers
Related terms
See also
Commentary
Capital buffers serve as a financial safety net above minimum capital requirements, enhancing institutional resilience; clarity in regulatory definitions is crucial for drafting compliance documents.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.