Under Basel II, banks and other financial institutions are recommended to calculate 'downturn LGD' (downturn loss given default), which reflects the losses occurring during a 'downturn' in a business cycle for regulatory purposes. Downturn LGD is interpreted in many ways, and most financial institutions that are applying for IRB approval under BIS II often have differing definitions of what Downturn conditions are. One definition is at least two consecutive quarters of negative growth in real GDP. Often, negative growth is also accompanied by a negative output gap in an economy (where potential production exceeds actual demand).