Now, under current European rules, Pillar 2 measures could also be used to achieve macroprudential goals. And this could lead to a conflict of interest. Imagine that there is a downturn in the financial cycle. From the viewpoint of each bank, credit risks increase and microprudential supervisors may want to increase Pillar 2 capital demands.
Looking at the same trend, macroprudential supervisors might want to support credit growth and counter the cycle over a longer time horizon and from a systemic point of view. Thus, they may want to decrease Pillar 2 capital demands. Who should prevail? And how should Pillar 2 be calculated when two different approaches are used by two different stakeholders?