15th meeting of the Financial Market Stability BoardMarch 7, 2018
Convening for the 15th time, the Financial Market Stability Board (FMSB) met on March 7, 2018, to discuss its Annual Report for 2017, undertake its regular review of the level of the countercyclical capital buffer (CCyB) and adopt a preliminary work plan for 2018, among other things.
FMSB Annual Report for 2017 to be published in late April
In its 15th meeting, the FMSB addressed the Annual Report for 2017 and thus the central aspects of its work in 2017 – notably the annual review of macroprudential capital buffers, which serve to mitigate systemic risks in the financial system. In this context, the FMSB recommended broadening the set of banks required to hold a systemic risk buffer (SyRB) and extending the scope of the SyRB to the unconsolidated level; leaving the rates set for the other systemically important institution (O-SII) buffer and the list of banks subject to O-SII requirements unchanged; and keeping the rate for the countercyclical capital buffer at 0%. Against the backdrop of rising real estate prices and low interest rates, the FMSB also addressed the sustainability of real estate lending, with a view to preventing systemic risks from emerging and limiting speculations in the area of residential real estate funding. In this respect, the FMSB welcomed the expansion of the macroprudential toolbox as laid down in Article 22b Banking Act, which was carried out to increase the scope for macroprudential action should real estate funding practices give rise to systemic risks. While not seeing any need for immediate action during 2017, the FMSB encouraged banks to pay particular attention to sustainability in new lending.
Once the final finance sector data for 2017 can be included in late April, the Annual Report will be submitted to the Finance Committee of parliament and the Federal Minister of Finance, and subsequently published on the FMSB’s website.
During its meeting, the FMSB also adopted its preliminary work plan for 2018, which is focused on reviewing the level of the macroprudential capital buffers and the sustainability of real estate funding.
FMSB recommends keeping the countercyclical capital buffer (CCyB) rate at 0%
As the credit-to-GDP gap1 remains negative and thus does not indicate excessive credit growth, the FMSB confirmed its recommendation to the FMA to leave the rate for the countercyclical capital buffer for risk-weighted assets at 0% from July 1, 2018. In future, the credit-to-GDP gap as well as the Austrian Financial Stress Indicator (AFSI) will be published at regular intervals by the FMSB (Recommendation FMSG/1/2018).
Information on the FMSB
The FMSB, which became operational in 2014, works toward strengthening financial stability. Its members are representatives of the Austrian Federal Ministry of Finance, the Fiscal Advisory Council, the Financial Market Authority and the Oesterreichische Nationalbank. In particular, the FMSB may issue recommendations to the Financial Market Authority and provide risk warnings.
1 Difference between the credit-to-GDP ratio and its trend.