CNB lowers countercyclical capital buffer rate to 2%

The CNB Bank Board decided today to lower the countercyclical capital buffer rate for exposures located in the Czech Republic to 2%, mainly because of a gradual reduction in the cyclical systemic risks in the banking sector’s balance sheet. Banks will be required to comply with the rate from 1 October 2023.

When making its decision, the Bank Board took into account the current position of the Czech economy in the financial cycle, the size of the credit risks accumulated in the banking sector’s balance sheet and the evolution of its vulnerability.

The countercyclical capital buffer is an important macroprudential policy instrument. Banks and credit unions create this buffer on the basis of the CNB’s instructions in periods of excessive growth in lending. This is because excessive lending growth usually increases financial imbalances and leads to a rise in systemic risk. By contrast, at times of falling economic activity, it is customary to release the buffer so that non-financial corporations and households have access to loans without excessively tight conditions.

More details on the Bank Board’s decision are available in the Provision of a general nature on setting the countercyclical capital buffer rate for the Czech Republic III/2023, which will be published on 15 September 2023.[1]

The CNB has been deciding on the countercyclical capital buffer rate every quarter since 2014. The next decision will be made at the Bank Board meeting in November 2023.

Petra Krmelová
Director of the Communications Division and CNB Spokesperson