This way, on the one hand, credit would become more expensive and therefore might slow down, while on the other hand, banks would not need to reduce the loan supply during the downswing since they could run down this buffer before reaching the binding constraint of capital regulation. This instrument aims to limit supply-driven credit expansions and to soften contractions.
One instrument which has similar effects but is designed more for demand-driven credit booms is a ceiling on the loan-to-value ratio for collateralised loans (and equivalently on margins and haircuts for securities lending). By forcing the borrower to put up more of its own funds, it makes credit more expensive and reduces demand.