CCB full Form in banking is Capital Conservation Buffer. CCB is a kind of security net for banks around the world. Banks must have this accumulation of money over their normal reserves of cash. Consider it an insurance policy for financial security, as saving money for rainy days. The extra cash can help banks cover losses in the event that the economy goes down. Therefore now, with CCB in place banks are better prepared to withstand difficult economic times without going into a crash.
What More Should You Learn about CCB?
The main objective of CCB? It’s about helping banks to make more money in times of prosperity. Why? They’ve got enough money in their tank to absorb the losses incurred during economic downturns which reduces the risk of banks failing, and the taxpayers being forced to help them out. The most interesting aspect of CCB is the way it’s calculated It’s an amount from the risk-weighted asset of the bank. These are the assets of the bank however they are adjusted according to the risk they pose. The more risky the assets have, the more buffer the bank must have. It’s a great method of ensuring that the safety net of each bank is the appropriate size for the risk they’re taking.
