2017-07-05
As of 30 June 2017, the countercyclical capital buffer rate applied in the Republic of Lithuania stands at 0 per cent. The unchanged rate was set by the Board of the Bank of Lithuania.
Such a decision was adopted taking into account the main and additional indicators for setting the countercyclical capital buffer rate as well as on the basis of detailed analysis of the situation in the financial and real estate markets.
‘Keeping this in mind, we will continue to actively monitor the credit and real estate markets. The upcoming quarters will undoubtedly be crucial, revealing the direction that the market will take – natural cooling off or further heating up. The latter stance would enhance the need to take additional measures to strengthen the financial system’, said Tomas Garbaravičius, Member of the Board of the Bank of Lithuania.
Early warning indicators of the need to raise the countercyclical capital buffer rate suggest a low probability of systemic risk in the banking sector and no credit and RE market imbalances so far. On the other, Lithuania has recently seen robust growth in its loan portfolio, a rise in housing prices, and stronger credit momentum in the housing market. Should these trends persist, the build-up of cyclical risk would also increase the need for application of countercyclical capital buffer.