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Countercyclical Buffer Rate for the Republic of Serbia Kept Unchanged

At its meeting on 6 June 2019, the NBS Executive Board decided to keep the countercyclical capital buffer (CCyB) rate for the Republic of Serbia at 0%.

As part of its responsibility to set measures and activities aimed at maintaining and strengthening financial stability, and based on the Decision on Capital Adequacy of Banks (RS Official Gazette, Nos 103/2016 and 103/2018), the NBS calculates on a quarterly basis the reference guide based on which it sets the CCyB rate for the Republic of Serbia.

The reference guide is calculated based on the deviation of the credit-to-GDP ratio from its long-term trend. March 2019 data show that the share of total loans in GDP equalled 73.3%, while the estimated credit-to-GDP gap was -8.4 percentage points. Though rising, the estimated credit-to-GDP gap is still below its long-term trend, which indicates that the financial cycle is in a phase in which the introduction of a CCyB rate above 0% could constrain credit activity. Nevertheless, the closing of the gap in some segments of household lending indicates risk in this credit segment and calls for targeted measures to curb the risk without jeopardising overall lending activity. In accordance with this, at its meeting of 24 December last year, the NBS Executive Board adopted a set of regulations introducing novelties in the field of household lending, aimed at preventing the emergence of non-performing loans in the banking system and precluding negative consequences for financial stability.

Additional information about the CCyB and the explanation for the above decision are available on the NBS website, under Financial Stability, Capital Buffers.Capital Buffers.

Financial Stability Department