People's Bank of China and China Banking and Insurance Regulatory Commission, Circular on the Establishment of a Countercyclical Capital Buffer Mechanism

Issued: September 30, 2020

Effective: as of date of issuance

Main contents: With reference to international practice and relevant requirements of the Basel Committee on Banking Supervision, the Circular specifies the method of allocation for, the scope of coverage of and the evaluation mechanism for China's countercyclical capital buffer. Additionally, in light of an assessment of current systemic financial risks and epidemic prevention and control requirements, it specifies that the initial countercyclical capital buffer ratio will be 0, thus not increasing the capital management requirements of banking financial institutions. The People's Bank of China and the China Banking and Insurance Regulatory Commission will regularly assess and revise the countercyclical capital buffer requirements, by comprehensively taking into account factors such as the macroeconomic and financial situations, the leverage ratio level and the robustness of the banking system to guard against systemic financial risks.