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Countercyclical buffer unchanged

Today, the Ministry of Finance has decided to follow Norges Bank’s advice not to change the countercyclical capital buffer requirement.

The buffer requirement will be 2.5 percent from 31 December 2019, as decided by the Ministry in December 2018.

The purpose of the countercyclical capital buffer requirement is to strengthen banks’ solvency and resilience to absorb loan losses, in order to 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 been built up.

Each quarter, Norges Bank shall provide advice to the Ministry on the level of the countercyclical capital buffer requirement. In a letter of 18 December 2019, Norges Bank recommended keeping the level unchanged. Norges Bank’s assessment is published in its Monetary Policy Report with financial stability assessment 4/19. In a separate letter of 18 December 2019 to the Ministry, Finanstilsynet said that it concurs with Norges Bank’s advice.

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