The Minister releases the countercyclical capital buffer
As a reaction to covid-19, the Minister for Industry, Business and Financial Affairs decided on 12 March 2020 to reduce the countercyclical capital buffer rate to 0 per cent with immediate effect.
In recent years, the Council has focused on increasing credit institution's resilience through a gradual increase in the countercyclical capital buffer. The Council's recommendations to increase the buffer have been followed by the Minister for Industry, Business and Financial Affairs. The aim was to build up a buffer to a size substantial enough to make a difference in case the need to release it emerged. The release of the buffer in face of the uncertainty following the spread of covid-19 is therefore in line with the Council's approach. Releasing the buffer aims to prevent the banks and mortgage credit institutions from reducing credit supply due to capital shortfalls.
According to Danish legislation, the Systemic Risk Council is an advisory body, with the purpose of preventing and reducing systemic financial risks, that may put pressure on all or parts of the economy. The Council shall, according to Danish law, not act in relation to crisis management.
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