On Dec. 18, LAT CB adopted decision on countercyclical capital buffer.
LAT CB changed approach to application of countercyclical capital buffer (CCyB).
Started to implement a positive neutral CCyB application approach.
CCyB Strategy
CCyB rate maintained at a certain base level, higher than 0%, under standard risk conditions, or in neutral phase of financial cycle, when risk neither elevated nor low.
LAT CB has recognized 1% as a suitable base level of the CCyB norm.
Will continue to assess intensity of cyclical systemic risk every quarter.
As the cyclical risk increases, CCyB rate will be increased in proportion to its intensity already from the positive base rate, not the zero level.
In crisis conditions, CCyB norm may be reduced or canceled.
Implementation
To start implementation of positive neutral CCyB approach, LAT CB board adopted decision on Dec. 18, 2023: on Dec. 18, 2024, requirement for CCyB rate of 0.5% will come into force; and on Jun. 18, 2025, CCyB rate of 1% will come into force.
