Budapest, 1 October 2020 The MNB still does not see overheating in lending. Accordingly, the central bank does not consider it necessary to increase the countercyclical capital buffer from the current 0 percent rate after 1 October 2020, especially in view of the coronavirus pandemic and its negative financial and economic effects.

The Financial Stability Board (FSB) of the Magyar Nemzeti Bank (MNB) has left the 0-percent countercyclical capital buffer rate applicable in case of domestic exposures unchanged. The increase of the capital requirement is not justified, either based on the level and dynamics of the benchmark credit-to-GDP gap or on the additionally monitored indicators. Based on available data, lending to the economy was not overheated, even given the dynamic credit growth observed so far, real estate market processes and the close-to-equilibrium level of corporate credit.

The spread of the global coronavirus pandemic, which became global by March 2020, and its first wave had severely negative economic and financial consequences. The emerging economic shock resulted in a significant contraction in GDP in the second quarter of 2020 and had a significant impact on bank lending. The so far realized and still uncertain future effects of the pandemic will significantly affect the state and changes of both the business and financial cycles. This will also affect the indicators underlying decisions related to the countercyclical capital buffer, and will be taken into account by the FSB during its decision-making related to the buffer 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 reviews the rate of the countercyclical capital buffer quarterly in case of Hungarian exposures.

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

Magyar Nemzeti Bank