ESRB updated the list of countercyclical capital buffer (CCyB) rates applicable in countries in the Eurosystem. The countries for which the CCyB information has been recently updated include Denmark and Slovakia. The CCyB for Denmark is being increased to 2% from December 30, 2020 while CCyB for Slovakia is being increased to 2% from August 1, 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.
Keywords: Europe, EU, Banking, Macroprudential Bulletin, Basel III, Stress Testing, Systemic Risk, Initial Margin, Liquidity Risk, OTC Derivatives, Procyclicality, ECB
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
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