Systemic risk buffer

The aim of the systemic risk buffer is to avoid or minimise systemic risks that could have a serious negative impact on the financial system and the Estonian economy. The buffer requirement helps to ensure that banks have sufficient capital to cover systemic risks.

Eesti Pank can set the systemic risk buffer requirement for all the risk exposures of banks, for sectoral risk exposures[1], or for subsets of them. Eesti Pank follows the guidelines of the European Banking Authority (EBA) in defining sectoral exposures. Eesti Pank can also set a systemic risk buffer requirement for risk exposures located in another member state of the European Union to reciprocate the systemic risk buffer requirement set by that state.

Eesti Pank can apply the systemic risk buffer requirement to all banks, some of them, or only one bank.

Application of a systemic risk buffer requirement in Estonia

Risk position

Buffer rate

Applies

Scope

Total risk exposure2%1.08.2014 – 31.07.2016All credit institutions
Risk exposures located in Estonia1%1.08.2016 – 30.04.2020All credit institutions
0%1.05.2020 – 05.12.2021All credit institutions


Decrees of the Governor of Eesti Pank


[1] Sectoral risk exposures:

  1. all retail exposures to natural persons secured by residential property
  2. all exposures to legal persons secured by mortgages on commercial immovable property
  3. all exposures to natural persons except those under point 1
  4. all exposures to legal persons except those under point 2

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