18th meeting of the Financial Market Stability BoardDecember 10, 2018
In its 18th meeting on December 10, 2018, the Financial Market Stability Board (FMSB) announced that its annual evaluation of progress in realizing macroprudential objectives had led to a positive assessment. Moreover, the FMSB has decided to keep its recommendation on the countercyclical capital buffer unchanged.
The FMSB has achieved its macroprudential objectives through adequate measures
In its macropudential strategy, the FMSB has defined macroprudential supervision targets, specifying that these targets are to be evaluated annually. The FMSB has found that the measures taken in 2018 have contributed significantly to the realization of these targets.
In its press release on its 17th meeting, the FMSB had clarified its understanding of sustainable lending. As some banks had been leaning toward easing their lending standards in the area of real estate loans, this was an appropriate step, even if systemic risks are limited at the moment. As credit growth is not excessive, the FMSB has kept its recommendation on the countercyclical capital buffer unchanged in 2018, i.e. at 0% of risk-weighted assets (see FMSG/6/2018).
With its recommendations on the systemic risk buffer (FMSG/2/2018) and the other systemically important institution (O-SII) buffer (FMSG/3/2018), the FMSB has taken adequate measures to contain direct and indirect risk concentration and to prevent moral hazard. As of this year, the O-SII buffer also covers banks with a high share in guaranteed deposits, which makes it an important contribution toward increasing the financial market’s risk-bearing capacity.
To make its reasoning transparent, the FMSB regularly publishes press releases and recommendations. In doing so, it plays a vital part in improving market participants’ and the general public’s knowledge about issues concerning financial stability and systemic risk developments. In this context, the FMSB once more calls upon lenders to ensure sustainable real estate lending.
The FMSB keeps its recommendation on the countercyclical buffer unchanged
As lending to domestic borrowers still shows no signs of excessive credit growth, the FMSB confirmed its recommendation to the Financial Market Authority (FMA) to leave the rate for the countercyclical capital buffer at 0% of risk-weighted assets from April 1, 2019 (see FMSG/6/2018).
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.