FI raises the countercyclical buffer rate to 1 per cent

Finansinspektionen (FI) has decided to raise the countercyclical buffer rate to 1 per cent. The new buffer rate will be applied as of 29 September 2022. Until then, the buffer rate will remain at 0 per cent.

FI lowered the countercyclical buffer rate from 2.5 per cent to 0 per cent in March 2020. The reason for this was the economic uncertainty caused by the outbreak of the coronavirus pandemic. During the spring, the uncertainty has gradually subsided and the economic situation has improved. FI makes the assessment that the economic recovery has gained further momentum during the autumn and the risks of large credit losses in the banks has continued to decrease. At the same time, the upswing in asset and housing prices, combined with rising household debt, indicate elevated risks in the financial system. FI is therefore raising the buffer rate now, initially to 1 per cent. Due to the implementation period of twelve months, the new rate will enter into force on 29 September 2022.

"The major banks went into the pandemic with significant capital buffers. Together with various support measures, this has helped maintain the credit supply during the pandemic. We now need to rebuild the capital in the banks to have the resilience to meet future crises," says FI Director General Erik Thedéen.

Raising the buffer rate to 1 per cent will increase the banks' capital requirements. But the banks already have the capital today to cover this increase.

Gradual increase in the buffer rate

FI is intending to gradually raise the buffer rate to 2 per cent in 2022 if the economic recovery continues, credit losses are low, and the banks can meet the demand for credit. If the risks associated with asset markets and indebtedness remain, FI may thereafter raise the buffer rate even further.

New procedure

A new procedure has been implemented as of today for the countercyclical buffer. The regulations regarding the countercyclical buffer rate have been annulled and replaced with official decisions that will be published on FI's website.

Read more at www.fi.se

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