The countercyclical capital buffer should remain unchanged at 2 per cent
News According to a new legislative amendment that entered into force on 1 July 2024, Finansinspektionen is to consult with the Riksbank before making decisions on the countercyclical capital buffer. The Riksbank's overall position is that the countercyclical capital buffer should remain unchanged for the third quarter of 2024 at its neutral level of 2 per cent.
The Riksbank's view is that the countercyclical capital buffer should remain unchanged at its neutral level of 2 per cent for the third quarter of 2024. The current level of the countercyclical capital buffer reflects the risks in the Swedish financial system and contributes to the banks' overall resilience.
The countercyclical capital buffer is a capital requirement for banks that, unlike other capital requirements, varies over time. In Sweden, it is Finansinspektionen that decides on the level of the countercyclical capital buffer four times a year. The capital buffer aims to increase the banks' resilience against systemic risks. In a crisis, where banks may suffer large losses and be forced to tighten their lending, which could exacerbate an economic downturn, the buffer requirement can be reduced, or set to zero. This increases the headroom down to the binding capital requirements, thereby freeing up capital that banks can use to both manage losses and support lending to households and companies. In this way, it can help to alleviate an economic downturn.