Cyprus Central Bank sets countercyclical capital buffer rate at 0% for Q1 2019

The Central Bank of Cyprus set on Thursday its countercyclical capital buffer (CCyB) rate for the first quarter of 2019 at 0%.

In press release issued here today, the Bank says that on Thursday in accordance with the methodology described in its macroprudential policy, set the CCyB rate for the period 1 January 2019 – 31 March 2019 at 0% of the total risk exposure amount of each licenced credit institution and

each investment firm that provides the investment services of dealing on own account or underwriting of financial instruments and / or placing of financial instruments on a firm commitment basis and has not been exempted by the CBC due to its small or medium size.

Based on the time series ending on 30 June 2018, the Central Bank adds, the gap between the credit-to-GDP ratio and its long term trend (credit-to-GDP gap) based on the broad credit definition is -66.7%. At the same time, the gap between the credit-to-GDP ratio and its long term trend (credit-to-GDP gap) based on the narrow (bank) credit definition is -62.0%.

“Given that the credit-to-GDP gap is lower than 2% and taking into account the additional indicators that were assessed by the CBC, the benchmark buffer guide is 0% and the CCyB rate has been set at 0%,” it notes.

“In addition to the credit-to-GDP gap, the CBC takes into account a range of quantitative and qualitative information in its assessment of system-wide risks associated with periods of excessive growth,” the press release says.

The additional indicators assessed by the CBC are non-financial private sector indebtedness, banking sector resilience, the real estate market, the real economy and external imbalances, the press release concludes.

Source: Cyprus News Agency