- Central Bank Prudential Policies
The Minister welcomes the Central Bank’s decision to reduce the Countercyclical Capital Buffer, from 1% to 0%. This decision will free up bank capital that can be used to provide credit, and to restructure and extend the loans of bank customers, both individuals and SMEs. The release of this regulatory buffer by the Central Bank in this time of need shows the importance of the Central Bank’s introduction of the buffer two years ago in stronger economic times.
The impact of the reduction of this buffer to 0% will free up in excess of €1 billion of bank capital. This capital amount has the potential to support approximately €13 billion of restructured lending to bank customers that need assistance. Combined with the relaxation of Pillar 2 guidance and the Capital Conservation Buffer by the European Central Bank, the reduction in this buffer will ensure that banks have significant resources at their disposal to support borrowers.
The Minister also welcomes the Central Bank’s ongoing work with European colleagues to ensure that bank customers, whether personal or business customers, impacted by COVID-19 are extended forbearance without their loans being classified as defaulting.