This holds in particular with regard to activation of macroprudential measures such as the CCyB. In this respect, two aspects were crucial when communicating and explaining why the countercyclical capital buffer was the appropriate instrument to address cyclical risks in the German financial system.
The first aspect is the – quite intuitive – narrative of the buffer, which derives from its preventive nature: “Build up a buffer in good times that can be used in bad times”. The CCyB can have a preventive effect in cases where multiple banks are simultaneously confronted by unexpected adverse economic developments and mounting losses.