The countercyclical capital buffer (CCyB)

UK banks and building societies must set aside financial resources (capital) to act as a shock absorber for bad times

What is the UK’s countercyclical capital buffer?

Since the 2008 global financial crisis, we have made UK banks and building societies increase the financial resources (capital) they have set aside to act as a shock absorber for bad times.

The countercyclical capital buffer (CCyB) is one such tool which enables the Financial Policy Committee (FPC) to adjust the resilience of the UK banking system to the changing risks it faces over time.

The FPC sets the level of the UK CCyB rate. If the committee thinks risks are growing, it sets a higher UK CCyB rate.

This means that banks are required to have an additional cushion of capital to absorb potential losses, enhancing their resilience and contributing to a stable financial system.

Then, if those risks materialise, the FPC can let banks use this extra capital they have set aside, which helps them keep lending to households and businesses even in bad times.

The FPC’s approach to setting the countercyclical capital buffer is set out in its Policy Statement.

Foreign CCyB rate announcements (of relevance to UK)

Country

Current CCyB rate

Implementation date

Pending CCyB rate

Implementation date

Australia

1.00%

01.01.2023

 

Bulgaria

2.00%

01.10.2023

 

 

Croatia

0.50%

31.03.2023

1.00%

31.12.2023

      1.50% 30.06.2024

Czech Republic

2.00%

01.10.2023

 

Denmark

2.50%

31.03.2023

 

Estonia

1.00%

07.12.2022

1.50%

01.12.2023

France

0.50%

07.04.2023

1.00%

02.01.2024

Germany

0.75%

01.02.2023

 

Hong Kong

1.00%

12.10.2020

 

 

Hungary

0.00%

01.01.2016

0.50%

01.07.2024

Iceland

2.00%

29.09.2022

2.50%

15.03.2024

Ireland

1.00%

24.11.2023

1.50%

07.06.2024

Lithuania 1.00% 01.10.2023

Luxembourg

0.50%

01.01.2021

 

 

Netherlands

1.00%

25.05.2023

2.00%

31.05.2024

Norway

2.50%

31.03.2023

 

Romania

1.00%

23.10.2023

 

Slovakia

1.50%

01.08.2023

 

 

Sweden

2.00%

22.06.2023

   

The information in this table reflects policy decisions taken on or before 30 November and published on publicly available websites.

All EEA states not listed above have set their CCyB rate at 0%.

This page was last updated 06 December 2023

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