The Bank of Greece announced that the countercyclical capital buffer for the banking system will be set at 0.25%, effective from 1 October 2025. This measure aims to strengthen banks' resilience against future crises by building up capital buffers when systemic risks are not particularly elevated. This rate was decided after assessing factors such as the credit-to-GDP ratio, the debt burden and real estate market trends, which indicate limited risks at the moment.
Aiming to address unforeseen crises
The implementation of the buffer allows financial institutions to cope with unforeseen crises, such as the COVID-19 pandemic, without disrupting the flow of funding to the economy. The measure is important for the Bank of Greece's macroprudential policy, which aims to safeguard financial stability in the medium term, under the influence of a stable macroeconomic environment and the resumption of the investment grade for the country's credit rating.The Bank of Greece, in its quarterly assessment, based on the European Systemic Risk Board (ESRB) recommendation, found that the credit-to-GDP gap has remained negative since 2012, and in the first quarter of Although some sectors, such as residential real estate and credit to non-financial corporations, show trends of systemic risk accumulation, the risk environment remains neutral overall.
Strengthening the resilience of the banking sector
This decision by the BoG is linked to its overall strategy to strengthen the resilience of the banking sector. The data show improved fundamentals and supervisory indicators in Greek banks, which continue to operate in a stable macroeconomic environment. The creation of the countercyclical capital buffer helps to shield the banking sector against future crises and enhances the stability of the financial system.This decision is not only about managing existing risks, but also about preparing for possible future disruptions in the global or domestic economy, such as the experience of the COVID-19 pandemic, which caused major turbulence without warning. The Bank of Greece takes into account the need for stability and growth in the banking sector to continue to ensure the smooth functioning of the financial system and the provision of liquidity to the real economy, particularly in difficult circumstances.Overall, this decision highlights the importance of sound prudential policy, building up capital buffers in good economic times, so that banks are prepared to deal with future crises without disrupting financial stability.The Bank of Greece's decision is based on the need to ensure that banks are ready to deal with future crises without disrupting financial stability.The Bank of Greece's decision is based on the need to ensure that banks are prepared to deal with future crises without disrupting financial stability.