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.

Foreign CCyB rate announcements (of relevance to UK)

Country Current CCyB rate Implementation date Pending CCyB rate Implementation date
Australia 0.00%  01/01/2016  1.00% 01/01/2023 
Bulgaria 0.50% 01/10/2021 1.00% 01/10/2022
 

1.50% 01/01/2023
Croatia  0.00%  01/01/2016  0.50%  31/03/2023 
Czech Republic 1.00% 01/07/2022 1.50% 01/10/2022
2.00% 01/01/2023
      2.50% 01/04/2023
Denmark 0.00% 12/03/2020 1.00% 30/09/2022
      2.00% 31/12/2022
Estonia 0.00%  01/01/2016  1.00%  07/12/2022 
France  0.00%  01/04/2020  0.50%  07/04/2023 
Germany  0.00%  01/04/2020  0.75%  01/02/2023 
Hong Kong 1.00% 12/10/2020
Hungary 0.00%  01/01/2016  0.50%  01/07/2023 
Iceland  0.00%  18/03/2020  2.00%  29/09/2022 
Ireland 0.00%  01/04/2020  0.50%  15/06/2023 
Luxembourg 0.50% 01/01/2021
Netherlands 0.00%  01/01/2016   1.00%  25/05/2023 
Norway 1.50% 30/06/2022 2.00% 31/12/2022
      2.50% 31/03/2023
Romania  0.00%  01/01/2016  0.50%  17/10/2022
Slovakia 1.00% 01/08/2020 1.50% 01/08/2023
Sweden  0.00%  16/03/2020  1.00%  29/09/2022 
       2.00% 22/06/2023 

The information in this table reflects policy decisions taken on or before 5 July 2022 and published on publically available websites.

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

This page was last updated 02 August 2022

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