Countercyclical buffer unchanged

The Ministry of Finance has today decided to keep the level of the countercyclical capital buffer for banks unchanged. This is in line with the advice for Q2/17 from Norges Bank.

Each quarter, The Ministry of Finance shall make a decision on the level of the countercyclical buffer. The Ministry of Finance decided on the 15 December 2016 that banks shall hold a countercyclical buffer of 2 percent from the 31 December 2017. Today, the countercyclical buffer requirement is set at 1,5 percent.

The purpose of the countercyclical capital buffer is to strengthen the financial soundness of banks and their resilience to loan losses in a future downturn and mitigate the risk that banks will amplify a downturn by reducing their lending. Banks should hold a countercyclical capital buffer when financial imbalances are building up or have built up. High property price inflation over a long period and a persistent rise in household debt ratios suggest that financial imbalances have built up.

Each quarter, Norges Bank shall draw up a basis for the decision on the level of the countercyclical capital buffer, and provide an assessment and advice about the level of the countercyclical buffer. In a letter from the 21 June 2017 Norges Bank has advised the Ministry to keep the countercyclical buffer unchanged. Norges Bank's decision basis is published in the Monetary Policy Report with financial stability assessment 2/17. The Financial Supervisory Authority has stated that it concurs with the advice.

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