MNB to introduce countercyclical capital buffer
MNB headquarters in Budapest (Image by Jessica Fejos)
The National Bank of Hungary (MNB) yesterday announced its introduction of a countercyclical capital buffer to reduce the impact of future financial crises, Hungarian news agency MTI reported.
(Photo: Jessica Fejos)
"In the future the additional capital requirement prescribed in periods of excessive lending will mitigate excessive credit outflow, while in crisis periods the release of the formerly accumulated capital buffers will support lending, and thereby the recovery of the economy," the MNB said, explaining the move.
The countercyclical capital buffer rate will be set at 0% of total risk-weighted assets from the start of next year, as "no excessive credit growth" can be observed in the Hungarian banking system at present, the MNB said.
The rate, to be between 0% and 2.5%, though higher "in justified cases", will be set each quarter in a central bank decree.
The buffer, to comprise capital components of the highest quality (CET1), must be accumulated by credit institutions and investment firms, though small- and medium-sized investment firms will be exempted from the requirement.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.