# kaal:claim:2061166-007

**Claim.** Even the residual national discretion to set countercyclical buffers between 2.5 and 5 percent is misleading, because a Member State such as the United Kingdom is unlikely to sustain a 5 percent buffer while Germany requires only 2.5 percent and thereby hands German banks a competitive advantage.

**Type.** predictive  **Support.** argued

**Holds when.**

- buffers set above the 2.5 percent mutual recognition ceiling
- competing national banking sectors, especially where the state holds bank ownership stakes

**Source quote.**

> The Commission proposal explicitly allows Member States to implement countercyclical buffers of up to 5%, but limits mutual recognition to the 2.5% ceiling. Even in these instances, the proposed discretion may be misleading.

**From.** Christoph K. Henkel, Wulf A. Kaal, *Contingent Capital in European Union Bank Restructuring* (2012), 3. Revisions of the Capital Requirements Directives, page 25

**Cite as.** Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166

**Verify.** sha256 of source PDF `43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Henkel%20and%20Kaal%20-%202012%20-%20Contingent%20Capital%20in%20European%20Union%20Bank%20Restructuring.pdf

**Failure mode.** Illusory national discretion above the recognition ceiling  (family: harmonization-and-standardization-failure)

**Topics.** institutional-design

**Keywords.** countercyclical-buffer, national-discretion, competitiveness, crd-iv

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