Brussels, 22/10/2010 (Agence Europe) - The European Commission has opened a public consultation exercise that will run until Friday 19 November on creating in the EU further capital buffers for banks and easing fluctuations in the financial system by introducing countercyclical capital buffers for banks, namely variable capital reserves that banks would have to accumulate during fat years and which could be drawn upon to continue lending and borrowing during lean years. These buffers would be in addition to banks' capital requirements. The Commission explains that “a regime for countercyclical capital buffers could also help to moderate the build-up of excessive levels of credit in the financial system by raising the cost of credit”. The following questions are asked: How should the capital buffers be calculated for banks with branches in several member states? What would be the role of the European Systemic Risk Board and the European Bank Authority to be set up by under the new financial supervision legislation when it comes to national supervisory authorities calculating cash buffers? Taking inspiration from the Basel Committee's decisions (see EUROPE 10213), the introduction of capital buffers in EU rules would be part of the draft legislation revising bank capital requirements to be unveiled by the European Commission in the first quarter of 2011. (M.B./transl.fl)