The four macro-prudential instruments – the countercyclical capital buffer (CCB), sectoral capital overlays, the core funding ratio, and limits on high LVR mortgage lending – are designed to provide additional buffers to the financial system on top of the baseline prudential settings in periods of cyclical pressure.
Given the potential impact and public profile of the framework, the MoU requires the Reserve Bank to consult with the Government prior to the use of the macro-prudential instruments. Accountability has been supported by our regular reporting on macro-prudential developments in our biannual Financial Stability Reports.