A875 : Règlement CSSF N° 23-06 du 29 décembre 2023 sur la fixation du taux de coussin contracyclique pour le premier trimestre 2024.

The countercyclical capital buffer rate applicable to relevant exposures located in Luxembourg remains set at 0.50% for the first quarter of the year 2024.
The countercyclical capital buffer aims to counteract procyclical developments in credit markets. By reinforcing the level of capital during periods of excessive credit growth, associated with an intensification of systemic risks, the countercyclical capital buffer contributes to absorbing losses during crises while enabling credit institutions to continue providing credit to the economy.
In accordance with Recommendation CERS/2014/1, the determination of the countercyclical capital buffer rate by macroprudential authorities follows the principle of „discretionary power orientation.“ According to this principle, authorities rely on predefined rules while exercising discretionary power when deciding on the appropriate buffer rate:
– Recommendation CERS/2014/1 specifies the methodological foundations for assessing the countercyclical capital buffer rate associated with the degree of financial intermediation in the economy, measured by the “Credit-to-GDP“ ratio.
– The aforementioned recommendation also notes that, given the dynamic nature of financial systems and the specificities of national economies, macroprudential authorities consider additional indicators in their decision-making process, signaling the exacerbation of systemic risk associated with periods of excessive credit growth.
Applying the above methodology to the most recent quarterly data, the “Credit-to-GDP“ ratio, based on bank loans granted to households and non-financial corporations in Luxembourg, is estimated at 93.0% in the third quarter of 2023. The deviation of the „Credit-to-GDP“ ratio from its long-term trend is negative and estimated at -12.0%, below the activation threshold of 2%. The countercyclical capital buffer guide calculated according to Recommendation CERS/2014/1 is therefore set at 0%.
However, additional analyses dedicated to cyclical risk assessments conducted by BCL and CSSF, based notably on measures and early warning indicators outlined in Recommendation CERS/2014/1 of 18 June 2014, indicate that in an uncertain economic context, with a declining credit dynamic and ongoing decreases in real estate prices, potential negative shocks could be amplified, especially if they affect household disposable income or borrowers‘ repayment capacity. Short-term risks are likely to increase as rising interest rates impact the financial situation of households and businesses. Uncertainty persists regarding the potentially delayed effects of monetary policy and ongoing developments in the real estate market.
Therefore, maintaining the CCyB rate at 0.5% of risk-weighted assets on Luxembourg exposures contributes to preserving the capital of credit institutions and strengthening their resilience in the face of a possible realization of cyclical risks.
This regulation comes into effect on the day of its publication in the Official Journal of the Grand Duchy of Luxembourg.