The Czech National Bank leaves the countercyclical capital buffer rate at 1.25%
At its meeting on financial stability today, the Bank Board decided to leave the countercyclical capital buffer rate at 1.25%. The banking sector as a whole has long been profitable, well capitalised and resilient. The current level of the buffer sufficiently covers the risks arising from the present position of the economy in the expansionary phase of the financial cycle. At the same time, it serves as a safeguard reducing the banking sector’s vulnerability to potential adverse economic developments.
The Bank Board took into account the developments in the Czech economy, its position in the financial cycle and the resilience of the banking sector to cyclical systemic risks when making its decision. The economy is continuing to advance in the expansionary phase of the financial cycle. Credit activity expressed as a ratio to income remains close to its long-term averages, the debt of non-financial corporations and households is relatively low and its growth gradual, while credit portfolios are characterised by low materialisation of credit risk in an environment of ongoing economic growth.
The estimated level of cyclical systemic risks has, however, increased slightly and will rise further according to the current outlook. This trend mainly reflects the stronger recovery in the credit activity of households and corporations and property price growth expected in connection with the more favourable outlook for economic growth. The CNB’s analyses to date do not indicate any easing of credit standards across the board or excessive risk-taking by financial institutions, and the individual sectors show no signs of overleveraging. However, the Bank Board agreed that if the economy continues to move further into the expansionary phase of the financial cycle, it stands ready to raise the CCyB rate, and the likelihood of this step has increased.
The countercyclical capital buffer for exposures of banks and credit unions located in the Czech Republic is an important macroprudential policy tool to protect the banking sector against risks arising over the financial cycle. The CNB generally requires banks and credit unions to create this buffer in periods of growth in lending, when financial imbalances usually start to emerge and cyclical systemic risks increase. By contrast, at times of falling economic activity, accompanied by rising credit losses, the buffer is usually released so that non-financial corporations and households have access to credit without excessively tight conditions.[1]
More details on the Bank Board’s decision are available in the Official Information regarding the assessment of the setting of the countercyclical capital buffer rate – March 2026, which will be published on 6 March 2026.
The Bank Board decides on the countercyclical capital buffer rate four times a year. The Bank Board’s next meeting on this issue will be held in June 2026.
Jakub Holas
Director, Communications Division
[1] More information about the countercyclical capital buffer is available on the CNB website and on the website of the European Systemic Risk Board (external link).