Proposed amendment to regulations due to reduction in countercyclical buffer rate

Finansinspektionen proposes that the buffer rate be lowered by 2.5 percentage points and set at 0 per cent.

The spread of the coronavirus disease (COVID-19) is sending economic shocks throughout the world and Sweden. There is currently widespread uncertainty about the future course of events and how far-reaching the impact will be. The economic disruptions and the greater uncertainty are also having a negative impact on the financial system.

It is important to safeguard a well-functioning supply of credit when the economy is hit by shocks. Firms and households may need to take out loans to maintain production, investments and consumption.

Finansinspektionen (FI) therefore proposes a reduction in the countercyclical capital buffer rate. The measure is being taken pre-emptively to avoid a credit crunch due to recent developments surrounding COVID-19 and its impact on the economy.

FI therefore proposes that the buffer rate be lowered by 2.5 percentage points and set at 0 per cent. According to the proposal, the new buffer rate will be applied as of 16 March 2020. FI expects to retain the new buffer rate for at least twelve months. This means that any subsequent increases will not be expected to go into effect earlier than March 2022.

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