Governing Council statement on Macroprudential Policies
The Governing Council of the European Central Bank (ECB) releases the following statement after the meeting of its Macroprudential Forum on 14 December 2016:
Cyclical systemic risks remain contained in most of the countries covered by ECB Banking Supervision and in the euro area as a whole, with the financial cycle slowly picking up. Deviations of credit to GDP from its long-term trend (“credit gaps”) remain negative in most countries although credit growth rates are recovering across the board, supporting the moderate but steady expansion of the euro area economy. The recovery in bank lending indicates a progressive strengthening of the banking sector, as also reflected in the improvement in the ECB’s bank lending survey indicators. There are limited signs that financial asset prices are stretched across financial markets, while the recent steepening of the yield curve has implied revaluations, especially in the bond market. In line with decisions that have been taken by national authorities, the Governing Council agreed that a broadly based increase in countercyclical capital buffers (CCyBs) across the euro area is not currently warranted.
Real estate risks
Real estate markets in some countries continue to recover from the financial crisis, whereas relatively buoyant real estate dynamics or high household debt levels in other countries signal the risk of increasing imbalances.
The identified countries coincide with the ones recently subjected to warnings by the ESRB and most countries have already started to strengthen macroprudential policies in the real estate sector, but additional targeted macroprudential measures should be deployed. The ECB welcomes the recent decision taken by the authorities in Finland and Luxembourg and the legal initiatives in Austria and Germany and calls for the implementation of legislative frameworks for borrower-based measures in all euro area countries.
Global systemically important banks (G-SIBs) and other systemically important institutions (O-SIIs)
Over the last three months, the ECB, national authorities and the Financial Stability Board (FSB), in consultation with the Basel Committee on Banking Supervision (BCBS), have conducted the 2016 updated assessment of global systemically important banks (G-SIBs) in euro area countries. The assessment resulted in eight banks in France, Germany, Italy, the Netherlands and Spain being allocated to the internationally agreed G-SIB buckets 1 and 3, which entail capital buffer rates of 1.0% and 2.0% respectively. Buffer rates are applicable from 1 January 2018 and subject to a phase-in period. The requirements have been established following the methodology of the BCBS of November 2014. Over the coming weeks national authorities will implement the G-SIB buffer requirements through the EU legal framework and will publish their decisions.
Since the last Macroprudential Forum meeting national authorities have also decided on the capital buffers for the 110 other systemically important institutions (O-SIIs). These capital buffers are in line with the newly introduced ECB methodology for assessing O-SII buffers. All identified O-SIIs will have a strictly positive capital buffer rate as of 2019 in line with the ECB floor methodology (see Annex for a description of the ECB methodology for assessing O-SII buffers).
The Governing Council conducted its assessment of all macroprudential decisions notified by national authorities to the ECB, in line with Article 5 of the SSM Regulation, and did not deem it necessary to apply higher requirements. See the Annex for an overview of the main macroprudential measures taken in the countries under ECB Banking Supervision that have been notified to the ECB and published since 23 September 2016.
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The Macroprudential Forum includes all members of the ECB’s Governing Council and Supervisory Board and meets four times a year. Under the SSM Regulation, the ECB has been assigned specific powers in the field of macroprudential policies. In particular, the ECB has the responsibility to assess macroprudential measures adopted by the national authorities in the countries within the ECB’s Banking Supervision and it has the power to apply, if deemed necessary, more stringent measures aimed at addressing risks to financial stability.
Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63).
The powers are based on Article 5 the SSM Regulation and Article 13h of the Rules of Procedure of the ECB (ECB/2014/1), OJ L 95, 29.3.2014, p. 56. The Governing Council shall have the right to endorse, object to or amend proposals of the Supervisory Board. The Governing Council shall also have the right to request the Supervisory Board to submit a proposal or to undertake specific analysis. If the Supervisory Board submits no proposals addressing such requests, the Governing Council, taking into account the input of the relevant committee and of the relevant internal structure, may take a decision in the absence of a proposal from the Supervisory Board.