Countercyclical capital buffer

Published: 8/11/2017 Modified: 31/3/2022
The countercyclical buffer is a releasable macroprudential instrument used to counter procyclicality in bank lending and mitigate risks to the stability of the financial system.

Exposure to cyclical systemic risks, which usually become apparent only after the cycle reversal, increases during the upward phase of the financial cycle. Countercyclical buffer (CCyB) build-up in the upward phase of the financial cycle ensures timely allocation of additional capital. This, in turn, enables credit institutions to absorb losses and maintain lending activity more easily in the downward phase of the financial cycle or in case of a sudden crisis.

Since the introduction of this instrument in 2015, the CCyB rate for all credit institutions in the Republic of Croatia stood at 0%. On 28 March 2022, the CNB adopted the decision on the increase of the countercyclical buffer rate to 0.5%, to be applied as of 31 March 2023.

Decision on the countercyclical buffer rate (OG 39/2022), (28/3/2022)

 


Announcement of the increase of the countercyclical buffer rate for the Republic of Croatia for the second quarter of 2023 to 0.5%

In response to the continued accumulation of cyclical systemic risks, in particular the rise in residential property prices and dynamic lending in the segment of housing loans, the CNB adopted the decision on the increase of the countercyclical buffer rate to 0.5%, to be applied as of 31 March 2023. The purpose of the measure is to ensure timely allocation of additional capital in an effort to strengthen the resilience of credit institutions to possible losses associated with exposure to cyclical systemic risks in the downward phase of the financial cycle or in case of a sudden crisis. In view of the fact that the banking sector on an aggregate level has ample capital headroom above the current regulatory capital requirements, additional capital requirements should not have a significant impact on either the supply of credit and lending standards or on interest rates.

As the designated authority, the CNB will continue to monitor regularly the economic and financial developments and the further evolution of systemic risks, so as to be able to adjust in time the countercyclical buffer rate or apply other macroprudential measures within its powers, as appropriate.

 


PAST DECISIONS

Decision on the countercyclical buffer rate (OG 9/2015), (19/1/2015)

 


PAST NOTIFICATIONS