Countercyclical capital buffer (CCyB)

The countercyclical capital buffer (CCyB) rate for the period 1 October 2019 - 31 December 2019 has been set at 0%.

On 10 September 2019, the Central Bank of Cyprus (CBC), in accordance with the methodology described in its macroprudential policy, set the CCyB rate for the period 1 October 2019 - 31 December 2019 at 0% of the total risk exposure amount of:

(a) each licensed credit institution and

(b) each investment firm that:

i. provides the investment services of dealing on own account or underwriting of financial instruments and / or placing of financial instruments on a firm commitment basis; and

ii. has not been exempted by the CBC due to its small or medium size.

Based on the time series ending on 31 March 2019:

• The gap between the credit-to-GDP ratio and its long term trend (credit-to-GDP gap) based on the broad credit definition is -60,9%
• The gap between the credit-to-GDP ratio and its long term trend (credit-to-GDP gap) based on the narrow (bank) credit definition is -82,5%.

Given that the credit-to-GDP gap is lower than 2% and taking into account the additional indicators that were assessed by the CBC, the benchmark buffer guide is 0% and the CCyB rate has been set at 0%.

In addition to the credit-to-GDP gap, the CBC takes into account a range of quantitative and qualitative information in its assessment of system-wide risks associated with periods of excessive growth.  The additional indicators assessed by the CBC are:  non-financial private sector indebtedness; banking sector resilience; the real estate market; the real economy; and external imbalances. The summary table of indicators used by the CBC is set out in this file.

Additional information on the CCyB, which, since its introduction on 1 January 2016, has been set on a quarterly basis, is provided in this file.