The Central Bank of Ireland is increasing the countercyclical capital buffer (CCyB) rate on Irish exposures from 0% to 1%, with effect from July 05, 2019. The Central Bank of Ireland also published an "Explainer" or research related to CCyB that supports the case for activating the buffer sufficiently early in the economic cycle, to ensure that the buffer is available for future downturns.
In increasing the CCyB requirement at this stage, the Central Bank of Ireland is looking to protect the banking sector against potential losses associated with a build-up of cyclical systemic risk and thereby support a sustainable provision of credit to the real economy throughout the financial cycle. The setting of the rate at 1% acknowledges the exposure and susceptibility of the Irish economy to a downturn or the materialization of cyclical systemic risk, potentially arising from an external shock. The decision also reflects the expected limited impact on the credit environment and real economy at this stage. In line with this objective and taking account of the relative sensitivity of the Irish macro-financial environment, the Central Bank of Ireland expects to maintain a positive CCyB rate when there is a sustained trajectory in indicators related to emerging cyclical systemic risk.
Effective Date: July 05, 2019
Keywords: Europe, Ireland, Banking, CCyB, Systemic Risk, Capital Requirements, Central Bank of Ireland
Sam leads the quantitative research team within the CreditEdge™ research group. In this role, he develops novel risk and forecasting solutions for financial institutions while providing thought leadership on related trends in global financial markets.
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