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Applicable countercyclical capital buffer rate remains at 0 per cent

December 27, 2016

Implementing macroprudential policy, the Board of the Bank of Lithuania resolved that as of 31 December 2016 the countercyclical capital buffer rate applicable in the Republic of Lithuania remains unchanged, at 0 per cent. Such a decision was made based on a lending and real estate (RE) market analysis. 

‘While the RE and credit market is not overheated so far, credit growth has gained some momentum and RE market activity has been the highest since the crisis which hit almost ten years ago. We will continue closely monitoring lending and RE market developments and will evaluate the need for the application of a countercyclical capital buffer on a quarterly basis,’ said Tomas Garbaravičius, Member of the Board of the Bank of Lithuania.

Countercyclical capital buffer is secured with Tier I bank capital. This additional capital buffer can be changed in order to reduce the procyclicality of credit market developments. It is a macroprudential policy instrument actively applied by the Bank of Lithuania since mid-2015. The 0 per cent countercyclical capital buffer rate then set has not been changed to date; it would, however, be changed if signs of unsustainable credit developments were identified.

The background material for the decision for setting the countercyclical capital buffer rate is published on the website  of the Bank of Lithuania on a quarterly basis.