The countercyclical capital buffer is intended to protect the banking sector against losses that could be caused by cyclical systemic risks. Countercyclical capital buffer requirement requires banks to add capital at times when credit is growing rapidly so that the buffer can be reduced when the financial cycle turns. Banks can use the additional capital buffers they have built up during the growth phase of the financial cycle to cover losses that may arise during periods of stress and to continue supplying credit to the real economy.
Eesti Pank has been given the responsibility for setting the levels for the countercyclical capital buffer in Estonia. Eesti Pank bases its assessments of the capital buffers and their levels on the principles agreed by the European Union in the Capital Requirements Directive and also considers the specific nature of the Estonian economy and credit cycle.
Eesti Pank assesses the need for the countercyclical buffer and decides on the rate for it once a quarter.
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Quarter 3, 2019 Eesti Pank decided on 30 September 2019 to keep the countercyclical capital buffer rate for credit institutions at 0% of the credit risk exposures located in Estonia.
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Assessments |
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Quarter 3, 2019.pdf |
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Decrees of the Governor of Eesti Pank
- Eesti Pank Governor’s Decree No.8 of 1 December 2015 Decree “Setting the Countercyclical Buffer”
- Eesti Pank Governor’s Decree No.9 of 1 December 2015 “Calculating the Institution-Specific Countercyclical Buffer and Recognising Countercyclical Buffer Rates from Other Countries”
Countercyclical capital buffer rates in other countries:
- The European Systemic Risk Board (ESRB) publishes countercyclical capital buffer rates in other European Union countries.
- The Basel Committee on Banking Supervision (BCBS) publishes countercyclical capital buffer rates in Basel Committee member jurisdictions.
