Budapest, September 30, 2021 – Based on the indicators examined and taking into account the long-term effects of the complex economic situation caused by the coronavirus pandemic, the level of cyclical financial systemic risks does not yet justify the imposition of a countercyclical capital buffer. As a result, the MNB’s Financial Stability Board maintains the counter-cyclical capital buffer rate at 0% as of October 1, 2021.

The Magyar Nemzeti Bank (MNB) Financial Stability Board (FSB) left the countercyclical capital buffer rate applicable to domestic exposures unchanged at 0%.

The main indicator on which the decision is based, the credit / GDP gap has continued to narrow, i.e. the size of the stock of loans relative to GDP has approached its equilibrium value. estimated, but still has not reached it. The narrowing of the spread has slowed and is expected to widen again in the coming quarters. This is mainly due to the slowdown in loan growth compared to recent years and improved GDP growth data as the economy reboots. In addition to the credit / GDP gap, the central bank also examines a set of indicators of overheating and vulnerability of the system’s cyclical risk map when making capital buffer decisions. The indicators monitored do not imply the need to prescribe a capital buffer. In particular, the indicators linked to the evolution of credit to businesses, as well as the real estate price / income indicator, show a slightly increasing level of cyclical systemic risk, which on the whole still does not require no intervention.

The previous waves of the coronavirus pandemic, which went global in the spring of 2020, had serious negative economic and financial consequences. The emerging economic shock also had a strong dampening effect on bank lending, which, in addition to the moderating effect of the moratorium on repayments, was maintained thanks to significant government and central bank interventions. The national economy is recovering at an unusually fast pace, except for the slower recovery of some sectors, especially those affected by the pandemic. However, given the important role of government policies and central banks, a rapid increase in cyclical systemic risks is not yet expected. Overall, therefore, there is currently no justification for setting an effective capital requirement and starting to build a capital buffer.

The objective of the counter-cyclical capital buffer is to increase the stability and resilience of the system of financial intermediaries through credit cycles. The MNB reviews the countercyclical capital buffer rate applicable to domestic exposures on a quarterly basis.

Additional information on the counter-cyclical capital buffer and other information necessary for its operation

Magyar Nemzeti Bank

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Central Bank of Hungary published this content on September 30, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on September 30, 2021 12:51:01 PM UTC.