Fifth, determining the right size of a capital buffer is both a difficult task and also a contentious issue; it will need to be large enough to absorb losses in a downturn and still enable banks to continue lending but not so large as to make the insurance against failure too expensive.
Finally, any scheme of capital buffers needs to be simple and transparent, entail low implementation costs and be as rulebased as possible. Can we design a framework for reducing procyclicality that meets all these requirements? 18. BCBS is working on addressing all these issues.