22nd meeting of the Financial Market Stability Board

At its 22nd meeting on December 13, 2019, the Financial Market Stability Board (FMSB) evaluated whether the intermediate macroprudential objectives have been met and whether the measures taken in line with the macroprudential policy strategy have been effective. Moreover, the FMSB renewed its recommendation to leave the countercyclical capital buffer (CCyB) rate at 0% for the second quarter of 2020.

FMSB evaluates progress in achieving intermediate macroprudential objectives

The FMSB concluded that appropriate and effective measures have been taken to achieve the intermediate macroprudential objectives. Regarding the intermediate objective to prevent excessive credit growth, loans continue to show no signs of excessive growth at the aggregate level. This is also reflected in the current level of the CCyB rate. As to real estate lending to households, however, implementation and effectiveness of the FMSB’s guidance on sustainable real estate financing have been found to vary to date. There are also indications that systemic risks emanating from real estate financing are on the rise. The FMSB therefore underlines that a homogeneous implementation of its guidance is crucial for maintaining financial stability in Austria. Structural capital buffers, i.e. the systemic risk buffer (SyRB) and the buffer for other systemically important institutions (O-SII buffer), effectively meet two intermediate objectives pursued by Austrian macroprudential supervisors: to limit direct and indirect exposure concentrations and to contain the systemic effects of misaligned incentives in the financial system. In 2020, the FMSB will review both the SyRB and the O-SII buffers, taking into account the new rules on macroprudential capital buffers as set out in the EU’s Capital Requirements Directive (CRD V), while avoiding cliff effects. The macroprudential policy strategy will likewise be adapted in 2020 to reflect the changing regulatory framework.

FMSB recommends leaving countercyclical capital buffer at 0%

While the growth of loans to Austrian borrowers has been on a slight uptrend since early 2018, it is still not excessive. Therefore, the FMSB decided to recommend that the FMA apply the CCyB at its current level of 0% of risk-weighted assets also from April 1, 2020 (Recommendation FMSG/5/2019).

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.