MNB Keeps 0.5% Capital Buffer Activation Date

MNB

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The Financial Stability Board of the National Bank of Hungary (MNB) has decided to leave the timing for the activation of the 0.5% countercyclical capital buffer rate unchanged on July 1, 2024, the central bank and financial market regulator said on Friday, according to a report by state news wire MTI.

The policymakers had decided at a review in 2022 to increase the countercyclical capital buffer rate from 0% for the first time since 2016, citing cyclical systemic risks and the high and rising level of housing market overvaluation. At a review in June 2023, they postponed the activation by one year until July 1, 2024, "in view of the easing of cyclical systemic risks and those associated with housing market overvaluation".

"In the last quarter, cyclical and housing market risks have continued to ease, which may continue in the short term as well. In the medium term, however, the recovery of the economic activity and the return of real wage growth might point to the return of increasing cyclical risks," the MNB said on Friday.

"The [MNB] will continue to continuously monitor systemic risks in the banking sector and prescribe the maintenance of additional capital buffer requirements depending on their development," it added.

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