(1) This regulation specifies the circumstances in which the FPC may recognise or set a buffer rate for exposures -

(a) held by a UK institution; and

(b) located in a country other than the United Kingdom (a "third country").

(2) Where the supervisory authority of the third country has not set and published a buffer rate for a capital buffer serving the same purpose as the countercyclical capital buffer, the FPC may set a buffer rate for the third country.

(3) Where the supervisory authority of the third country sets a buffer rate of more than 2.5% for a capital buffer serving the same purpose as the countercyclical capital buffer, the FPC may recognise that buffer rate.

(4) Where the supervisory authority of the third country sets a buffer rate (the "third country buffer rate") for a capital buffer serving the same purpose as the countercyclical capital buffer and the FPC reasonably considers that the third country buffer rate is not sufficient to protect UK institutions from the risks of excessive credit growth in the third country, the FPC may -

(a) set a buffer rate for the third country which is higher than the third country buffer rate; or