Countercyclical capital buffer

The countercyclical capital buffer (CCyB) is a macroprudential policy instrument that aims to prevent or mitigate the build-up of cyclical systemic risks and ensure an appropriate level of credit growth and leverage in both the upward and the downward phase of the economic and financial cycle.

A positive CCyB level provides a capital cushion on top of the minimum requirements applicable in the context of microprudential supervision and thus helps prevent and mitigate excessive credit growth and leverage in an economic upswing. Conversely, reducing or releasing the CCyB rate in the event of a shock or in a downturn can encourage the provision of credit to the real economy. 

The countercyclical capital buffer rate can be set between 0% and 2.5% (exceeding 2.5% in exceptional cases). It consists of CET1 capital and is expressed as a percentage of the total risk exposure amount of credit institutions in Greece. If a credit institution fails to fully meet the CCyB requirement, it is subject to restrictions on distributions of dividends, bonus payments and payments on Additional Tier 1 (AT1) instruments.

The Bank of Greece is responsible for setting the CCyB rate for Greece, if it is deemed necessary. Executive Committee Act 202/1/11.03.2022 lays down the implementation procedure for applying, and the methodology for setting, the CCyB rate in Greece.

On a quarterly basis, the Bank of Greece assesses the intensity of cyclical systemic risk and the appropriateness of the CCyB rate for Greece, taking into account, inter alia, the standardised credit-to-GDP gap. This indicator reflects the deviation of the ratio of credit to GDP from its long-term trend. The Bank of Greece also takes into consideration certain additional indicators to monitor the build-up of cyclical systemic risk, more specifically, indicators on credit developments, private sector debt burden, potential overevaluation of property prices, soundness of credit institutions, risk pricing and external imbalances.

If the Bank of Greece assesses that the current level of the CCyB rate is appropriate and should remain unchanged, it publishes a press release containing the following information: (a) the applicable CCyB rate, (b) the credit-to-GDP ratio and the standardised credit-to-GDP gap, (c) the buffer guide, and (d) the justification for the CCyB rate.

If deemed necessary, the Bank of Greece sets or adjusts the CCyB rate and publishes a decision in the form of an Executive Committee Act.

Since 1 January 2016, the countercyclical capital buffer rate for Greece has been maintained at 0%, i.e. at the lowest end of the permissible range, thus not affecting the capital requirements for credit institutions and investment firms. 


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