Minutes of the CNB Bank Board meeting on financial stability issues on 11 September 2025
Present at the meeting: Aleš Michl, Eva Zamrazilová, Jan Frait, Karina Kubelková, Jan Kubíček, Jan Procházka, Jakub Seidler
The countercyclical buffer (CCyB) rate
The meeting opened with a presentation given by the Financial Stability and Resolution Department on the CCyB rate. The movement of the economy in the expansionary phase of the financial cycle had slowed and further growth was highly likely to be only moderate. The growth was still being driven primarily by pure new loans to households and residential property prices. Credit activity remained close to the long-term average in relation to the income of households and non-financial corporations, signalling the usual level of acceptance of new cyclical risks one year ahead. Compared to the previous assessment, the estimated buffer rate needed to cover unexpected cyclical credit losses and the effect of growth in risk weights had decreased moderately to 1.3%. It had been favourably affected by the expected evolution of economic activity, which had reduced the credit risks at the outlook horizon. As the level of previously assumed credit risks in banks’ balance sheets was relatively stable and the credit standards applied to new loans were not being significantly relaxed, the Department recommended holding the CCyB rate at 1.25%.
In the ensuing discussion, the board members agreed that the financial cycle was in an expansionary phase driven primarily by developments in the mortgage market. At the same time, newly accepted cyclical systemic risks were not rising above the usual level. The current CCyB rate was thus consistent with the current position of the economy in the financial cycle and with its expected future evolution.
Eva Zamrazilová said she saw no reason to change the rate. She did not expect the credit activity of non-financial corporations to increase in the near future, nor – given the high prices of residential property and the related lower availability of mortgage loans – did she foresee any major upswing in the mortgage market. In light of the favourable forecast for unemployment, she also saw the probability of risks materialising as low. She noted the structure of corporate financing, in which non-bank and foreign funding sources play a substantial role. In a situation where domestic banks accounted for just one-third of the debt financing of non-financial corporations and a large proportion was denominated in euro, the monetary policy credit channel was weakening significantly.
Jan Frait agreed with the Department’s proposal to leave the rate unchanged. However, he said he was observing a modest rise in new cyclical risks and conceded that a discussion about raising the rate could take place in the not too distant future, even though the need for such a discussion might not be apparent from the current data. This was partly because for quite some time now, the very low default rate in the private sector had been due in no small measure to highly supportive fiscal policy. He expressed concern about the global underestimation of financial risks, as the series of adverse economic and geopolitical shocks in recent years had not had a major impact on the stability of the financial sector so far. This could be making markets less risk-sensitive, a process supported by expectations that governments and central banks would intervene forcefully if risks were to materialise.
Jakub Seidler agreed with leaving the rate unchanged. He mentioned that the data for the first and second quarters of this year were pointing to a slowdown of the financial cycle, mostly for technical reasons, whereas the preliminary data for the third quarter were indicating a further acceleration. He emphasised that the growth in the financial cycle indicator was still being driven mainly by households, for whom a rate increase would not lead to a real slowdown of the financial cycle because of the low risk weights on banks’ mortgage exposures. By contrast, a rate hike would tend to depress the credit activity of non-financial corporations, where lower growth prevailed. One argument he gave for not raising the rate was that credit market activity was close to the long-term average in relation to the sectors’ income. He also saw the still very low materialisation of credit risks as positive. In his opinion, the dynamic growth in the bond financing of non-financial corporations in recent quarters and its effect on the financial cycle needed further analysis.
Jan Kubíček agreed with leaving the rate unchanged. He was struck by the decline in the share of new foreign currency bank loans to non-financial corporations. He also said that loans to households for consumption had been rising at a year-on-year rate of 10% or more for some time. This credit segment was thus gaining in significance and increasing the cyclical risks. Nonetheless, its low weight meant it was still not having a major effect on the financial cycle indicator. He touched upon the issue of the impact of risk weights on credit exposures and the CRR3 regulatory changes on the results of the quantitative methods used to determine the rate.
Karina Kubelková agreed with the Department’s proposal. She said that the underlying analyses clearly implied no need to change the rate. She argued that the current rate was proving effective and cyclical systemic risks were not increasing. The methods used to determine the rate also spoke in favour of keeping it unchanged, be it the estimate of the components of unexpected cyclical credit losses and growth in risk weights, or the financial cycle indicator. She also mentioned that the Board discusses the rate four times a year, so she did not fear the risk of a late or insufficient CNB response. She concluded by stressing that the current rate was not having a negative impact on lending to the real economy.
Jan Procházka agreed with leaving the rate unchanged. He commented positively on the evolution of default rates in the private non-financial sector. He said that according to signals from the market, the mortgage market – a highly profitable segment – would most likely keep growing rapidly. He also joined the discussion about the role of bond financing of non-financial corporations and expected its dynamic growth to continue in the second half of the year.
Aleš Michl had no further comments on the proposal.
At the end of the meeting, the Board decided to maintain the CCyB rate for exposures located in the Czech Republic at 1.25%. All seven board members voted in favour of this decision.
Author of the minutes: Jiří Gregor, Financial Stability and Resolution Department