New countercyclical capital buffer framework
Published: 25 February 2022
The COVID-19 crisis has proved the added value of releasable bank buffers. This is why we will introduce a 2% countercyclical capital buffer (CCyB) in a standard risk environment. To do so, we have revised our CCyB framework. Following a six-week consultation period we are now publishing the final version of the CCyB framework.
Recent experience during the COVID-19 pandemic underlines the desirability of bank capital available for immediate release. Having a countercyclical capital buffer of 2% in a standard risk environment in place more accurately reflects the inherent uncertainty in measuring cyclical systemic risk. In addition, such a buffer gives banks additional scope to absorb losses and maintain lending in times of economic adversity. This will help Dutch banks to continue to fulfil their core function in case of larger shocks.
Against this background, we revised our CCyB framework and submitted it for consultation. The framework provides insight into the way in which we plan to use the CCyB going forward, thereby contributing to the effectiveness of macroprudential policy. After a six-week consultation period, we received one response, which is from the Dutch Banking Association (NVB). Further to this response, we have clarified that, when releasing the buffer, we will communicate the period during which we expect not to restore the buffer, see here. We are now publishing the final version of our revised framework, which we will use from now on to set the CCyB.