Germany planning to set 0.25% counter cyclical capital buffer for banks
- by Dikshita-Tiwari
- May 28, 2019 11:12
Germany’s Financial Stability Board suggested the introduction of a countercyclical capital buffer of 0.25% for banks to ensure lending should there be a sustained downturn in Europe’s largest economy, the Finance Ministry said on Monday. The step is meant as a precaution as regulators currently see “no concrete signs of acute risks for financial stability” in Germany, Deputy Finance Minister Joerg Kukies told a news conference in Berlin. Felix Hufeld, the president of Germany’s banking watchdog BaFin, said banks are given a 12-months time frame to implement the countercyclical capital buffer, starting from July 1.
The step means that the German banking sector as a whole will have to hold back an additional sum of 5.3 billion euros ($5.93 billion) for lending purposes in case of an economic downturn, Hufeld added.