Budapest, 30 March 2020 – The indicators monitored by the MNB do not indicate overheating in lending. The perception of the cyclical position is significantly influenced by the economic situation arising from the coronavirus pandemic, which also affects the financial cycle. Against this background, the maintenance of the current countercyclical capital buffer rate of 0 percent following 1 April 2020 is warranted. Due to the expected financial and economic effects related to the pandemic, the development of a lending level justifying the introduction of the capital buffer may be delayed beyond what was previously expected.
The Financial Stability Board (FSB) of the Magyar Nemzeti Bank (MNB) has not changed the 0-percent countercyclical capital buffer rate applicable in case of domestic exposures. 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 cyclical overheating and vulnerability indicators. Based on available data, lending to the economy, even given the dynamic credit growth observed so far, parallel with real estate market processes and the close-to-equilibrium corporate lending, was not overheated.
At the beginning of 2020 the coronavirus pandemic created an economic situation that also affects the financial cycle. Due to the expected financial-economic shocks related to the pandemic, the build-up of the countercyclical capital buffer may be delayed beyond what was previously expected.
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.
Magyar Nemzeti Bank