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Danthine: Credit - is the sky the limit?
The Swiss Federal Council has recently decided to activate the countercyclical capital buffer (CCB) acting on a proposal by the Swiss National Bank (SNB). The key feature of this new tool is to counter the “pro-cyclical” behavior of financial institutions whose collective action can be a source of systemic risk. To this end it requires banks to temporarily increase the level of capital they must hold as a backing for mortgage loans on residential property. In doing this, Switzerland is one of the first countries to make effective use of a tool advocated by the international community as a means for preemptively ... (full story)