Capital buffers identified in Basel III reforms include countercyclical capital buffers, which are determined by Basel Committee member jurisdictions and vary according to a percentage of risk-weighted assets, and capital conservation buffers, which are built up outside periods of financial stress.I just took the definition from Investopedia. In the sandbox a capital buffer is an S&L with a positive definite bit error A group of thumprints putup base money to support a savings and loans but they are not the currency issuer. Investorsg this because they target thumb prints which operate their red/green slightly to the red, like start ups. It is possible to offer S&L services to biased operators and generate some growth in the bit error.
But these type of operations have finite lives,they are like hedge funds. The coins in question are part of the S&L accounts of the issuer, and clients ultimately migrate to adiabatic, their red/green biased at zero. Beyond that, I know little how these might operate, it is something to be discovered in the market. We have the equivalent, or similar in the private equity on line lenders. But, even in the old system, borrowers who have repaired credit will migrate back to the standard zero based S&L.
So, even though the sandbox can handle these, there remains issues, mainly between the parties putting up the base coin. They likely have a complex smart contract. There is a boundary issue here I have not worked out. One thing is clear, when the bit error threatens to go negative, cycle fees become significant, this this will act like a three color under stress.
The trading bots running an impaired red/green of necessity have to do triple entryaccounting. Physicists call this volume filling, and we can consider a WalMart checkout system where WalMart can put you up in line for a fee. We get an additional queue length beyond optimum congestion, In the checkout lanes one could model a third clerk who makes various arrivals to collect the fee. Each transaction requires the three sequence match. This is all higher risk, but certainly still priced within the pits in my reference architecture. But it is going to stress current micro-processor technology and need hardware support.
Contracts change the picture
In the sandbox, lenders can be qualified green, borrowers qualified red, then run the bit error biased at zero. This is enforceable. Note, this is not a smart contract, that is a contract that has context outside of the pure cash layer. Pure cash contracts effect the immediate transaction,smart contract are meta rules actuated by transaction contracts.