Restrictions introduced because of the coronavirus mean a broad economic downturn is expected this year, and so many companies and households will face difficulties in repaying their loans. To avoid payments becoming overdue, the banks... more
The latest financial stability review from Eesti Pank finds that the banks have sufficient capital buffers even if restrictions remain in place for long time. The central bank estimates that if the restrictions last until August, the share of problem loans will rise to 13% of the loan portfolio... more
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... more
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... more
The sharp deterioration in the economic environment caused by the emergency situation has affected the market for car leases very fast. Reduced demand for car leases was one of the first signs of the loan market cooling. Momentum meant... more
Eesti Pank is reducing the systemic risk buffer for the commercial banks from 1% to 0%. This will free up 110 million euros for the banks, which they can use to cover possible loan losses or to make new loans.
“We have required the banks to build up buffers during the good times, and now... more
Eesti Pank today publishes the banking statistics for February, which show how banking and the credit market were functioning before the economy was affected by the spread of the coronavirus. The economic restrictions that have been put... more
The countercyclical capital buffer is intended to protect the banking sector against losses that could be caused by cyclical systemic risks increasing in the economy. Countercyclical capital buffers require banks to hold capital at times when credit is growing rapidly so that the buffer can be... more