【FRM每日一题】二级：案例强化（2）
备考FRM二级 | 2015-09-24
The capital conservation buffer: A.Is intended to protect banks from the countercyclical nature of bank earnings.
B.Can be set between 0.0% and 2.5% of risk-weighted assets, and is at the discretion of the regulators in individual countries.
C.Causes the Tier 1 equity capital ratio requirement to increase to 7% of risk-weighted assets in normal economic periods.
D.Requires that total capital to risk-weighted assets must be 10.5% at all times.
Answer: C
The capital conservation buffer is meant to protect banks in times of financial distress. Banks are required to build up a buffer of Tier 1 equity capital equal to 2.5% of risk-weighted assets in normal times, which will then be used to cover losses in stress periods. This means that in normal times, a bank should have a minimum 7% Tier 1 equity capital to risk-weighted asset ratio, an 8.5% total Tier 1 capital to risk-weighted assets ratio, and a 10.5% Tier 1 plus Tier 2 capital to risk-weighted assets ratio. The capital conservation buffer is a requirement and is not left to the discretion of individual country regulators. It is not a requirement at all times but is built up to that level in normal economic periods and declines in stress periods.
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