27 June 2016
The Magyar Nemzeti Bank has reviewed the countercyclical capital buffer rate applicable since 1 January 2016. Since the low level of the cyclical systemic risks does not warrant the raising of the countercyclical capital buffer rate the Financial Stability Board decided to maintain the current level of 0 per cent with a view to support lending.
The purpose of the countercyclical capital buffer is to increase the stability and resilience of the financial intermediary system across credit cycles, and ultimately to ensure the financial system’s sustainable contribution to economic growth. Based on the EU and national regulation, the capital buffer rate applicable to Hungarian exposures is defined by the Magyar Nemzeti Bank (MNB) in its capacity as a macroprudential authority. The Bank revises the applicable capital buffer rate quarterly, after giving due consideration to the capital buffer guide, indicators characterising the development of the banking sector’s cyclical position, as well as, if necessary, additional factors relevant in terms of financial stability.
At present, there is no material change in the level and dynamics of the cyclical systemic risks. The degree of the persistently negative benchmark credit-to-GDP gap, as well as the current level and dynamics of the supplementary overheating and vulnerability indicators signal a low level of the cyclical systemic risk. Accordingly, the Financial Stability Board of the MNB has decided to maintain the countercyclical capital buffer rate applicable to Hungarian exposures at 0 per cent. No change may be expected over the forthcoming one year horizon, which may support the credit institutions’ domestic lending activity.
Developments in the cyclical risks of the Hungarian financial system may also be affected by financial conditions in those countries where the Hungarian financial institutions have material exposures. The MNB is expected to monitor the credit outflow of the relevant third countries and set a countercyclical capital buffer requirement for the exposures of Hungarian credit institutions, as necessary. Over the past quarter the MNB, in compliance with the guidelines of the European Systemic Risk Board, elaborated the methodology that can be used for the identification of the range of third countries material for Hungary in this respect.
Magyar Nemzeti Bank