Czech National Bank in Na Příkopě Street in Prague.
Prague – The Banking Council of the Czech National Bank (ČNB) will decide today on the setting of banks' contributions to reserves for the protection of the credit market, i.e. the so-called countercyclical capital reserve rate. The CNB currently applies a two percent rate, from April it will increase to 2.5 percent based on earlier decisions of the Bank Board. The rate applies to all banks, savings and credit unions and securities dealers.
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Banks should create the reserve at a time of credit growth. Conversely, in the event of a decline in economic activity accompanied by increasing credit losses, it should be used by banks to cover losses. The aim is to prevent the transfer of potential problems of financial institutions to the economy. The effect may be a slowdown in credit growth.
Banking Board member Karina Kubelková said in November during the most recent meeting on the countercyclical capital reserve that the CNB is ready to lower the reserve rate in the event of a worsening of the economic situation and significant credit losses.< /p>
The CNB sets the rate of this reserve quarterly, usually a year in advance. The countercyclical capital buffer is one of the measures of the EU directive on access to the activity of credit institutions and on the prudential supervision of credit institutions and investment firms (CRD IV).
