The Czech National Bank leaves the countercyclical capital buffer rate at 1.25%
The Czech economy is in the growth phase of the financial cycle and the estimated level of cyclical systemic risks in the banking sector’s balance sheet remains stable. The banking sector as a whole is resilient and the current countercyclical capital buffer rate for exposures of banks and credit unions located in the Czech Republic of 1.25% limits the sector’s capital vulnerability to a potential economic downturn. Based on this assessment, the Bank Board of the Czech National Bank decided at its meeting today on financial stability to leave the rate at 1.25%.
The countercyclical capital buffer is an important macroprudential policy tool to protect the banking sector against risks arising over the financial cycle. The CNB generally requires banks and credit unions to create this buffer in periods of growth in lending when financial imbalances usually start to emerge and cyclical systemic risks increase. By contrast, at times of falling economic activity, accompanied by rising credit losses, the buffer is usually released so that non-financial corporations and households have access to credit without excessively tight conditions.[1]
More details on the Bank Board’s decision are available in the Official Information regarding the assessment of the setting of the countercyclical capital buffer rate – March 2025, which will be published on 7 March 2025.
The Bank Board decides on the countercyclical capital buffer rate four times a year. The next decision will be made at the Bank Board meeting in June 2025.
Jakub Holas
Director, Communications Division
[1] More information about the countercyclical capital buffer on the CNB website
Information about the setting of the countercyclical capital buffer in other European countries on the website of the European Systemic Risk Board (external link)
