Banks are also required to hold “capital conservation buffers” of an amount equal to at least 2.5 per cent of the risk-weighted assets, in the form of CET1 capital, which would be available in times of stress. However, the minimum level for total capital requirements remains at 8 per cent of risk-weighted assets.
In addition, banks would have to keep a Leverage Ratio as a percentage of total assets inclusive of off-balance-sheet items such as derivatives and letters of credits to constrain their debt build-up. Finally, banks would have to keep a countercyclical buffer from their retained earnings during periods of high economic growth to even out any stress on their capital during periods of economic downturns.