23 December 2016
The Magyar Nemzeti Bank has set the countercyclical capital buffer rate applicable from 1 January 2017. As the low level of the systemic risks does not warrant increasing the countercyclical capital buffer rate, the Financial Stability Board has decided to maintain the level of 0 per cent with a view to supporting lending.
The purpose of the countercyclical capital buffer is to increase the stability and resilience of the financial intermediary system across credit cycles. Under European Union and national regulation, the capital buffer rate applicable to Hungarian exposures is defined by the Magyar Nemzeti Bank (MNB) in its capacity as the macroprudential authority. The central 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. The MNB informs the general public about its decision regarding the countercyclical capital buffer rate on a quarterly basis.
There is no substantive change in the level and dynamics of cyclical systemic risks compared to the previous quarterly review. 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 domestic exposures at 0 per cent. No change is expected over the forthcoming one-year horizon that 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 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 the exposures of domestic credit institutions. The MNB identified the Russian Federation, Ukraine and Montenegro as material third countries for Hungary. Based on the evaluation of the MNB and partly of the European Systemic Risk Board, the current level of cyclical systemic risk in all three countries is low, therefore the prescription of countercyclical buffer rate for exposures in those countries is not justified in Hungary.
Magyar Nemzeti Bank
Further information on the countercyclical capital buffer and other information necessary for the functioning thereof.