The countercyclical capital buffer (CCyB) is one of the macroprudential instruments defined by the European Capital Requirements Directive (CRD IV) of 26 June 2013. Defined as a capital surcharge, its objective is to ‘protect the banking system from potential losses associated with the exacerbation of cyclical systemic risk [...] thereby supporting the sustainable supply of credit to the real economy throughout the financial cycle’ (Recommendation ESRB/2014/1, Recommendation A, Principle 1).
Rate applicable to domestic exposures
In France, the HCSF is responsible for setting the national countercyclical capital buffer rate each quarter. Decisions relating to the buffer are published on this website (HCSF Decisions page) and in the Official Journal.
On 1 April 2020, the HCSF published its decision to reduce the countercyclical capital buffer rate to 0%, with effect from 2 April 2020. Between 1 July 2019 and 2 April 2020, the rate in force had remained fixed at a level of 0.25% and was due to increase to 0.5% on 2 April 2020, in accordance with the High Council's previous decisions.
The HCSF decided on 7 April 2022 (decision D-HCSF-2022-1) to raise the rate to 0.5%. Banks must comply with this requirement from 7 April 2023. The HCSF decided on 27 December 2022 (decision D-HCSF-2022-6) to raise the rate to 1.0%. Banks will have to comply with this new requirement from 2 January 2024. The rate currently applicable is therefore 1.0%.
Rates applicable to foreign exposures
For member states of the European Economic Area (EEA), the European CRD IV directive introduces a principle of reciprocity, which consists of recognising the macroprudential measures taken in other countries.
Applied to the counter-cyclical capital buffer, the principle of reciprocity means that the national macro-prudential authority must recognise the rates put in place by other countries in order to calculate their specific counter-cyclical capital buffer rate for nationally authorised institutions. Reciprocity is mandatory for counter-cyclical buffer rates of up to 2.5% set by EEA Member States. The date of application of these rates is that set by the member country. Where a foreign macro-prudential authority sets a counter-cyclical capital buffer rate higher than 2.5%, explicit recognition by the HCSF is required before banks are obliged to apply it.
The European Systemic Risk Board (ESRB) publishes on its website an updated table showing the counter-cyclical capital buffer rates notified to the ESRB by the various EEA countries: rates less than or equal to the reciprocity ceiling of 2.5% therefore automatically apply to French banks (automatic reciprocity).
As regards third countries (outside the EEA), a principle of reciprocity exists among the member states of the Basel Committee on Banking Supervision (BCBS).
The BCBS publishes on its website an updated table showing the counter-cyclical capital buffer rates notified to the BCBS by member jurisdictions: rates less than or equal to the reciprocity ceiling of 2.5% are automatically applied to French banks (automatic reciprocity). The date of application of these rates (outside the EEA) is twelve months for third countries after the date of announcement of the decision, regardless of the date of application in the country.
When the macro-prudential authority of a third country sets a counter-cyclical capital buffer rate higher than 2.5%, explicit recognition by the HCSF is required for banks to be obliged to apply it. The HCSF has the possibility to impose a countercyclical capital buffer rate higher than the rate set by a third country, if this action is deemed necessary to protect domestic institutions against the risk of excessive credit growth in that country.