Macroprudential policy tools

The macroprudential tools available to Eesti Pank can be divided into three groups.

  1. Moral suasion measures, with which Eesti Pank can draw the attention of market participants to vulnerabilities in the financial system and so influence their decisions indirectly. This can include advice to market participants, but also covers the analysis and risk assessments in the Financial Stability Review, public presentations and press releases. Eesti Pank can also give its opinions and recommendations on measures that fall within the remit of other institutions.
  2. Measures set out in the European Union’s Capital Requirements Regulation and Directive, where the principles for implementation and coordination have been harmonised in the European Union. These include capital buffer requirements such as countercyclical capital buffer, systemic risk buffer, and systemically important institutions buffer, and also the measures under Article 458 of Regulation (EU) No 575/2013.
  3. Requirements for issuing loans, which derive their legal basis from the Credit Institutions Act. Eesti Pank has the right to set limits on the loan-to-value ratio, the debt service-to-income ratio, the maximum maturity of loans, and the loan-to-deposit ratio of credit institutions.

Eesti Pank generally assesses the need to set or change macroprudential measures twice a year and publishes the results in the Financial Stability Review.

Measure

Rate

From

Countercyclical capital buffer0%01.01.2016
1%07.12.2022
Other systemically important institutions bufferSwedbank AS2%01.08.2016
AS SEB Pank2%01.08.2016
Luminor Bank AS2%01.07.2018
AS LHV Pank1.5%01.01.2022
Risk weight floor for mortgage loans*15%30.09.2019
Requirements for issuing housing loans**loan-to-value (LTV) limit85%***01.03.2015
debt service-to-income (DSTI) limit50%01.03.2015
maximum maturity30 years01.03.2015

* The floor is set for the average risk weight of the mortgage loan portfolio of credit institutions that use the Internal Ratings based Approach.
** The limits may be breached by 15% of the volume of mortgages issued each quarter.
*** The limit is 90% for loans guaranteed by KredEx.

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