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Home > Financial Stability > Countercyclical Capital Buffer (CCyB) rates
 

Countercyclical Capital Buffer (CCyB) rates

UK CCyB rate

The Financial Policy Committee (FPC) is responsible for setting the UK CCyB rate ie the CCyB rate that applies to UK exposures of banks, building societies and large investment firms incorporated in the UK ("institutions"). To help the FPC determine the appropriate rate, it considers a number of core indicators, including the countercyclical capital buffer guide – for more information see Tools and indicators.

On 25 September 2017 the FPC maintained the UK CCyB rate at 0.5%.  Absent a material change in the outlook, and consistent with its stated policy for a standard risk environment and of moving gradually, the FPC expects to increase the rate to 1% at its November meeting, with binding effect a year after that. 

CCyB rates on foreign exposures

A cornerstone of the countercyclical capital buffer (CCyB) framework is that foreign institutions should face the same CCyB rate as domestic institutions when they lend cross-border. This is given effect in the EEA by CRDIV, in accordance with the Basel international agreement.  Under these arrangements, where a foreign authority sets a CCyB rate, this can be applied to the foreign exposures of domestic institutions, within each institution specific CCyB rate  - this process is referred to as “recognition” or, if mutual, ‘reciprocation’.
 
CRDIV as implemented in the UK allows the FPC to take certain decisions about third country rates, including whether a higher rate should be set for the purposes of UK institutions calculating their CCyBs. Under PRA rules, foreign CCyB rates applying from 2016 onwards will be automatically reciprocated up to 2.5%, unless the FPC sets a different rate.  
 
The following table shows CCyB rates that UK firms are currently required to meet and pending CCyB rates that have not yet been implemented.
 
Current and pending CCyB rates on foreign exposures of UK institutions in specific countries

Country Current CCyB rate ​ Implementation date Pending CCyB rate​ Implementation date
Hong Kong​ ​1.25​% 1 Jan 2017 ​1.875%​ ​​1 Jan 2018
​Norway ​1.50%​ 30 Jun 2016 2.00% 31 Dec 2017​
​​Sweden ​​2.00% ​19 Mar 2017
Czech Republic​ 0.50% 1 Jan 2017 1.00% 1 ​​July 2018​​​​
​Iceland​​ ​1.00%​ 1 Mar 2017 1.25% ​​​1 Nov 2017
Slovakia ​0.50%​ 1 Aug 2017 1.25% 1 Aug 2018
 
The information in this table reflects policy decisions taken on or before 6 September 2017.
 
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