Minutes of Czech central bank's meeting on financial stability issues
PRAGUE, March 24 (Reuters) -The following are minutes published on Friday from the Czech central bank (CNB) board's meeting on financial stability issues on March 9, at which the bank left the countercyclical buffer rate for banks unchanged:
The countercyclical buffer (CCyB) rate
The meeting opened with a presentation given by the Financial Stability Department on the CCyB rate. According to the aggregate financial cycle indicator and other indicators, the domestic economy remained in a downward phase of the financial cycle at the end of 2022 Q3 from the peak reached in 2021. However, relatively strong growth in loans to non-financial corporations, especially foreign currency loans, had interrupted the downward trajectory of the indicator. The expected macroeconomic developments, though, suggested that the indicator would continue to decline in value. The amount of previously accepted cyclical risks in the banking sector’s balance sheet remained elevated, and the share of higher-risk loans in the main loan portfolios was increasing. The subdued economic activity and still high level of geopolitical uncertainty underlying the future economic paths at home and abroad were creating the potential for large-scale materialisation of credit losses. This would lead to a rise in risk weights on loan portfolios and a consequent fall in the capital ratio. The Financial Stability Department therefore recommended leaving the rate at 2.5% and communicating that the CNB was prepared to initiate a gradual reduction in the rate if it judged that the cyclical credit risks in banks’ balance sheets were diminishing.
In their discussion, the board members agreed that, in view of the rising share of higher-risk loans, the low materialisation of credit losses to date, and the uncertainties associated with future economic developments in a difficult geopolitical situation, it was appropriate to leave the rate at 2.5%. Attention was also drawn to possible systemic risks to financial stability arising from the growing share of foreign currency loans to non-financial corporations in banks’ balance sheets. At the same time, however, the board members felt that the quantitative modelling approaches used for rate-setting decisions were sending signals of a gradual decline in the cyclical risks in banks’ balance sheets. Some of the board members expressed their readiness to discuss a possible reduction of the CCyB rate at future meetings.
According to Aleš Michl, in the current situation of tight monetary policy, it was also desirable to pursue a conservative macroprudential policy that supports credit cooling, which also helps to reduce inflation. Jan Frait stated that globally we were seeing an increase in the length of the financial cycle with a long-term build-up of credit risks in the banking sector’s balance sheets. However, the materialisation of those risks had been subdued by strongly supportive macroeconomic policies in many countries. He mentioned the absence of macrofinancial shocks leading to credit losses and the related limited impact of the relatively new IFRS 9 provisioning rules on the timely and conservative capture of credit risks. In his opinion, this information necessitated a review of the approach to releasing the CCyB after the peak of the financial cycle. He had noted considerations in this direction in other national macroprudential authorities. He anticipated that this would be reflected in methodological discussions in supranational regulatory institutions directed at maintaining a higher rate even in a downward phase of the financial cycle, as long as it was not accompanied by significant credit losses. He supported the proposal to keep the rate at its current level, while not ruling out a discussion about lowering the rate in the event of favourable economic developments and a sustainable improvement in loan portfolio quality. Tomáš Holub supported the proposal to keep the rate unchanged, partly in view of the risks accompanying the high share and rate of growth of foreign currency loans. He also stated that he considered it necessary to improve the quantitative approaches to setting the CCyB rate in order to transparently capture uncertainties and geopolitical risks that had so far been taken into account only on a qualitative level. Jan Kubíček discussed some aspects of the evolution of higher-risk loans and agreed with the need for maximum credibility and transparency in the quantitative methods used. Jan Procházka said that the rate was helping to dampen credit activity and viewed keeping it unchanged as appropriate and consistent with the monetary policy stance. Karina Kubelková expressed her readiness to initiate a discussion on lowering the rate in response to the current correction in the rate of economic contraction in the CNB’s macroeconomic forecast, the reduction in geopolitical risks and the expected decline in the financial cycle indicator.
After discussing the cyclical and selected structural sources of systemic risk, all the board members present voted to leave the CCyB rate for exposures located in the Czech Republic unchanged at 2.5%.
Reporting by Prague newsroom
Kapcsolódó eszközök
Legfrissebb hírek
Felelősségkizáró nyilatkozat: Az XM Group entitásai csak végrehajtási szolgáltatást és online kereskedési platformunkhoz való hozzáférést biztosítanak, ami lehetővé teszi, hogy a felhasználók megtekinthessék és/vagy felhasználhassák a honlapon vagy azon keresztül elérhető tartalmakat, amelyek nem módosíthatók és nem egészíthetők ki. A hozzáférés és felhasználás mindig a következők függvénye: (i) Felhasználási feltételek; (ii) Kockázati figyelmeztetés; valamint (iii) Teljes felelősségkizáró nyilatkozat. Az ilyen tartalmakat ezért csupán általános információként biztosítjuk. Külön felhívjuk figyelmét arra, hogy az online kereskedési platformunkon található tartalmak nem felhívások vagy ajánlatok tranzakciókba történő belépésre a pénzügyi piacokon. A pénzügyi piacokon folytatott kereskedés jelentős kockázattal jár a tőkéjére nézve.
Az online kereskedési platformunkon közzétett anyagok kizárólag oktatási / tájékoztatási célt szolgálnak, és nem tartalmaznak (nem tekinthető úgy, hogy tartalmaznak) pénzügyi, befektetési adóügyi vagy kereskedési tanácsokat vagy ajánlásokat, illetve kereskedési áraink jegyzékét, vagy bármilyen pénzügyi instrumentummal végrehajtott tranzakcióra vonatkozó ajánlatot vagy felhívást, vagy Önnek szóló kéretlen pénzügyi promóciókat.
Az ezen a honlapon szereplő, külső felektől származó, valamint az XM által készített tartalmak, például vélemények, hírek, kutatások, elemzések, árak és egyéb információk vagy külső felek oldalaira utaló hivatkozások „jelenlegi állapotukban”, általános piaci magyarázatként jelennek meg, és nem minősülnek befektetési tanácsnak. Amennyiben bármely tartalom befektetéssel kapcsolatos kutatásként értelmezhető, meg kell értenie és el kell fogadnia, hogy a tartalom nem a befektetéssel kapcsolatos kutatás függetlenségének előmozdítására szolgáló jogi követelmények szerint készült, következésképpen a vonatkozó törvények és jogszabályok szerint marketingkommunikációnak minősül. Kérjük, feltétlenül olvassa el és értse meg a fenti információkkal kapcsolatos „nem független befektetéskutatással kalcsolatos tájékoztatónkat” és a kockázati figyelmeztetésünket, amelyek itt érhetők el.
