The Central Bank of Cyprus (CBC) has decided to maintain the countercyclical capital buffer (CCyB) rate at 1.5% for exposures located in Cyprus, confirming its current macroprudential stance amid stable financial conditions.
In an announcement, the CBC said the rate already in force since 14 January 2026 will remain unchanged. The level was originally set following a decision taken on 14 January 2025 and reflects the central bank’s ongoing assessment of systemic risks in the domestic banking sector.
The decision was made in accordance with the Macroprudential Oversight of Institutions Laws of 2015 to 2022. The CBC noted that maintaining the buffer at 1.5% is appropriate given prevailing economic and credit conditions, signaling neither excessive credit growth nor a need for further tightening at this stage.
The countercyclical capital buffer is a regulatory tool designed to strengthen banks’ resilience by requiring them to build up capital during periods of economic expansion, which can then be released in times of stress to support lending.
The CBC’s assessment is based on a range of quantitative indicators, including the credit-to-GDP ratio and the credit-to-GDP gap, which measures deviations from long-term trends. These indicators form part of the central bank’s broader analytical framework for monitoring systemic risk.
(Source: CNA)
