This study contributes to the ongoing discourse about the resilience of financial institutions by assessing whether actions related to capital policy in Europe contribute to systemic risk. Using a versatile hierarchical framework, I estimate systemic risk and evaluate the multi-level effects of capital policy measures across Europe and over time. This probabilistic approach yields a hierarchy of implications for systemic risk due to capital policy measures for each of the 21 European countries over 83 quarters. I specifically examine tightening, loosening, and unclear policy measures in the dataset. My findings uncover that the accumulation of tightening policy actions inadvertently leads to an increase in system risk by 1 to 10 quarterly percentage points at the bank level. When considering the intra-national probability of 'random effects,' institutions in Greece, Ireland, and the United Kingdom seem to contribute to heightened systemic risk. My results indicate that capital adequacy regulation could inadvertently heighten systemic risk. This unintentional correlation may arise from various smaller institutions collectively amplifying systemic risk dynamics by investing in similar asset classes to adhere to capital rules.