29 June 2017

The Magyar Nemzeti Bank has set the countercyclical capital buffer rate applicable from 1 July 2017. The level of the cyclical systemic risk is low, therefore the Financial Stability Board - with a view to supporting lending - has decided to maintain the 0 per cent rate.

The purpose of the countercyclical capital buffer is to increase the stability and resilience of the financial intermediary system across credit cycles. The MNB sets the level of the countercyclical capital buffer on a quarterly basis.

Compared to the previous quarterly review despite the favourable processes observable in the credit market there is no substantive change in the level and dynamics of cyclical systemic risks. Though the turnaround of lending was achieved both in the household and corporate segments, the net credit outflow can not be considered as excessive. The degree of the persistently and significantly negative benchmark credit-to-GDP gap, as well as the current level and dynamics of the supplementary indicators on overheating and vulnerability signal low level in the cyclical systemic risks. Accordingly, the Financial Stability Board of the MNB has decided to maintain the countercyclical capital buffer rate applicable to domestic exposures at 0 per cent. Foreseeably no change is expected over the forthcoming one-year horizon, what may support domestic lending activity of credit institutions.

The development of cyclical risks in the domestic financial system may be impacted by financial developments of third countries where financial institutions with headquarters in Hungary have material exposures. Accordingly, the MNB monitors the lending practices of material third countries for the Hungarian banking system and, if necessary, prescribes a countercyclical capital buffer rate for those exposures of domestic credit institutions. The MNB has reviewed its current list of material third countries and identified Montenegro, the Russian Federation, Ukraine and as a new country Serbia concerning 2018.

Further information on the countercyclical capital buffer and other information necessary for the functioning thereof.

Magyar Nemzeti Bank