Czech central bank raises countercyclical capital buffer rate to 2 pct

The countercyclical capital buffer rate for exposures located in the Czech Republic will increase to 2 percent as of July 1, 2020, the Czech National Bank (ČNB) announced.

The rise was motivated by an increase in risks linked with the growth phase of the financial cycle of the Czech economy and partial strengthening of signals of vulnerability of the domestic banking sector, the central bank said.

The ČNB sets the rate on a quarterly basis, always with effect from the following year. In the event of a sudden turn in the financial cycle, the bank is ready to lower the rate or even enable a full dissolution of the buffer, central bank governor Jiří Rusnok said.

Author: Brian Kenety