The objective of the countercyclical capital buffer is to use capital as a macro-prudential instrument aimed at protecting the banking sector from periods of excess aggregate credit growth, that have often been associated with the build-up of system-wide risk.
In this regard, it is instructive to note that the minimum bank capital ratio (to suitably riskweighted assets) required to be held under the Basel norms is only a floor. Since the global financial crisis, many countries require their banks to hold capital at higher levels, as shown below.