On 31 May 2023, we announced an increase in the countercyclical capital buffer (CCyB) to 2%. Banks with loans outstanding in the Netherlands must comply with this requirement by 31 May 2024. Since the previous CCyB announcement, the risk environment has not changed substantially. Therefore, we see no reason to amend our previous CCyB decision.
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The purpose of the CCyB is to increase banks' resilience as cyclical risks build up, and to release the buffer as soon as risks materialise. This gives banks additional headroom to absorb losses in bad times and supports lending to businesses and consumers, thus limiting the immediate impact of a crisis on the real economy. The CCyB applies to domestic exposures and has a mandatory reciprocity of up to 2.5%. Therefore, as of 31 May 2024, foreign banks with exposures in the Netherlands must also hold capital due to the 2% CCyB that applies here.
In accordance with our framework for setting the CCyB, we aim for a 2% CCyB in a standard risk environment, i.e. a situation where cyclical systemic risk is neither particularly high nor particularly low. In doing so, we seek to take account of the inherent uncertainty involved in measuring (cyclical) systemic risks. We then determine the level of the CCyB on the basis of a varied set of indicators (including the credit gap shown in Chart 1, but primarily on the indicators in Table 1) that interpret the phase of the cyclical systemic risk and compare it with a structural trend.
Our Spring 2023 Financial Stability Report contains a detailed description of why felt it was suitable to raise the CCyB to 2%. Furthermore, we indicated at the time that we would reconsider the increase to 2% if financial stability risks materialised during the build-up period. For now, we see no reason to deviate from this earlier communication, meaning the build-up period mentioned above remains unchanged.
Chart 1 - Buffer Guide
This is the buffer guide solely on the basis of the credit gap, DNB takes a broader view at systemic cyclical risks (see Table 1 below).
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