The Czech National Bank leaves the countercyclical capital buffer rate at 1.25%

The CNB Bank Board decided today to leave the countercyclical capital buffer rate for exposures located in the Czech Republic at 1.25%. This was prompted above all by an assessment of cyclical risks, which remain stable even as the Czech economy gradually shifts to the start of the expansionary phase of the financial cycle.

The decision took into account the position of the economy in the financial cycle and the related estimated level of cyclical risks in the banking sector’s balance sheet. The Bank Board also took into consideration the banking sector’s resilience and its capital vulnerability.

The countercyclical capital buffer is an important macroprudential policy tool. Banks and credit unions create this buffer on the basis of the CNB’s instructions in periods of excessive growth in lending. Excessive lending growth usually increases financial imbalances and leads to a rise in systemic risk. By contrast, at times of falling economic activity, accompanied by rising credit losses, this 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 – September 2024, which will be published on 13 September 2024.

The CNB has been making decisions on the countercyclical capital buffer rate every quarter since 2014. The next decision will be made at the Bank Board meeting in November 2024.

Jakub Holas
Director, Communications Division


[1] NOTES FOR JOURNALISTS: