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    ESRB Updates List of Countercyclical Capital Buffers in November 2019

    November 07, 2019

    ESRB updated the list of countercyclical capital buffer (CCyB) rates applicable in countries in the Eurosystem. Denmark is one country for which the CCyB information has been recently updated. The CCyB for Denmark is slated to increase to 2% from December 30, 2020. The list contains the CCyB rates that have been announced, but not yet implemented, by the designated authorities.

    Exemptions are provided for certain small and medium-size investment firms from holding a CCyB in the following countries: Croatia, Cyprus, Luxembourg, Malta, Poland, Slovakia, Sweden, and the United Kingdom. As part of the information accompanying the announcement, designated authorities must notify ESRB about each quarterly setting of CCyB rates. CCyB is part of a set of macro-prudential instruments, designed to help counter procyclicality in the financial system. Capital should be accumulated when cyclical systemic risk is judged to be increasing, creating buffers that increase the resilience of the banking sector during periods of stress when losses materialize. This will help maintain the supply of credit and dampen the downswing of the financial cycle. A CCyB can also help dampen excessive credit growth during the upswing of the financial cycle. 

     

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    Keywords: Europe, EU, Banking, CCyB, Capital Buffer, Macro-Prudential Instrument, Systemic Risk, ESRB

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