Extra bank capital required when credit is growing too fast
The Basel III rule that tells regulators to demand more bank capital as the credit-to-GDP gap rises, reaching the maximum at a gap of 10 points.
After 2008 the Basel Committee on Banking Supervision added a buffer that rises and falls with the credit cycle. Its guide variable is the credit-to-GDP gap: the buffer starts to build at a gap of 2 points and reaches its maximum of 2.5 % of risk-weighted assets at 10 points. That is why 10 points is the threshold on the credit gap indicators here.