Countercyclical capital buffer 2016 Q4
Norges Bank has advised the Ministry of Finance to increase the countercyclical buffer for banks from 1.5 percent to 2 percent effective from 31 December 2017. The decision basis for the Bank's advice is presented in the December 2014 Monetary Policy Report.
House prices are rising sharply in large parts of the country, despite weak growth in the Norwegian economy. Recently, household debt growth has accelerated. High household debt accumulation increases the vulnerability of many households and heightens the risk of a sharp fall in demand and an increase in loan losses further out.
"High house price inflation and a continued rise in household debt ratios are signs that financial imbalances are building up further. Higher capital ratios will better equip banks to cope with increased losses further ahead", says Governor Øystein Olsen.
The Ministry of Finance decided today to increase the buffer rate in line with Norges Bank's advice. (Ministry of Finance press release)
Norges Bank's letter: Advice on the countercyclical capital buffer 2016 Q4
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