Brussels, 30/06/2014 (Agence Europe) - On Monday 30 June, the European Systemic Risk Board (ESRB) issued recommendations for bank regulatory bodies on countercyclical capital buffers in periods of accumulated systemic risks.
The ESRB says: “The countercyclical capital buffer regime under Directive 2013/36/EU follows the principle of 'guided discretion'. According to this principle authorities responsible for setting the buffer rate combine a rules-based approach with the exercise of their discretionary powers when deciding on the appropriate buffer rate. Accordingly, they are required to publish a buffer guide on a quarterly basis as a reference benchmark, but are encouraged to exercise their judgement when setting the buffer rate”.
Regulators in other member states are invited to recognise the countercyclical buffers introduced in another member state, failing which they should inform the ESRB, the European Central Bank and the national authority that introduced the countercyclical buffer in question.
The ESRB has published a list of criteria for deciding whether systemic risks exist, which includes criteria, such as over-inflation of house prices, deterioration of the lending market, increasing macroeconomic imbalances and excessive private sector debt.
National regulatory bodies have until 30 June 2016 to provide details of measures they have taken in line with the ESRB recommendations. A countercyclical capital buffer regime was introduced under Directive 2013/36/EU as part of the EU transposition of the Basel III bank capital rules. (MB)