15 March 2023

Increase in countercyclical capital buffer

New Central Bank Rules on Countercyclical Capital Buffers for Financial Undertakings, no. 256/2023, which were approved at the Financial Stability Committee’s (FSN) 14 March 2023 meeting, were published today in the Law and Ministerial Gazette [Stjórnartíðindi]. With the new Rules, the value of the countercyclical capital buffer is increased from 2% to 2.5% of the risk base for financial institutions’ domestic exposures. The increase will take effect twelve months from now.

In the FSN’s opinion, this increase is conducive to bolstering resilience still further in the face of the risks that have accumulated and could materialise in the coming term.

The countercyclical capital buffer is reviewed on a quarterly basis, and decisions to increase it generally do not take effect until twelve months later.