The Australian Prudential Regulation Authority will be responsible for making and disclosing any decision to activate or alter the proposed Basel III "counter-cyclical capital buffer", the RBA said yesterday.The RBA's Financial Stability Review spells out for the first time how Australia will implement the planned buffer.The RBA expects to "provide analysis to inform any such decision about the buffer", the Review says.The counter-cyclical buffer, of up to 2.5 per cent, was introduced in reaction to the global financial crisis. It is designed to slow credit growth when it reaches what history suggests are dangerous levels, and to provide extra protection against losses. Most of the time, the buffer is expected to be at zero. Increases in the buffer are to be announced up to 12 months in advance, giving banks time to accumulate capital.The counter-cyclical buffer poses special difficulties for countries like Australia where different regulators control monetary policy and prudential supervision. The buffer influences both, making it important that both regulators understand their slow-down role. RBA assistant governor Malcolm Edey said yesterday, in a speech to an IIR conference in Sydney, that the Basel III proposal left "a lot of scope for flexibility and discretion at the national level".That scope would be "very much needed", he declared. It would "take some time for national policy approaches to develop" and efforts to standardise approaches between nations would not be helpful.