The systemic risk buffer is intended to increase the resilience of the financial sector to non-cyclical risks that could have a serious negative impact on the national financial system or the economy.

The main reason for applying the systemic risk buffer requirement lies in the small size and openness of the Estonian economy and the vulnerability that causes. The problems caused by unforeseen negative shocks may emerge rapidly and to a greater extent than in many other European countries. The risks to financial stability are increased by the large share of loans to the real estate sector in the loan portfolios of the banks and the relatively small financial assets held by households. The buffer requirement helps to ensure that banks have sufficient capital to cover systemic risks.

The systemic risk buffer requirement has applied in Estonia since 1 August 2014. From 1 August 2016 all credit institutions have been required to hold a systemic risk buffer of 1% of risk exposures located in Estonia. Because of the COVID-19 pandemic, Eesti Pank took the extraordinary decision to lower the buffer rate to 0% temporarily from 1 May 2020.

When applicable



From 1.05.2020

Buffer rate




Risk exposure

Total risk exposure

Risk exposures located in Estonia

Risk exposures located in Estonia

Legal basis: Decree of the Governor of Eesti Pank No.6 of 30 May 2016 “Establishment of the requirement for the systemic risk buffer”.

In order to ensure a level playing field for the whole market, to maximise the effectiveness of the measure, and to reduce the risk of regulatory arbitrage, Eesti Pank has requested that when the buffer rate is positive the authorities of other member states apply equivalent additional buffer requirements to the banks that provide banking services in Estonia through branches or directly cross-border for their risk exposure in Estonia.