Tbilisi (GBC) - The Financial Stability Committee of the National Bank of Georgia (NBG) made a decision to update the framework for establishing a countercyclical buffer, taking into account the recommendation of the Basel Committee. To accumulate capital buffers for stressful periods, the Basel Committee suggested that countries establish a neutral positive countercyclical buffer.
If the existing standard countercyclical buffer base rate is equal to zero and takes a positive value in case of excess lending, the neutral positive countercyclical buffer base rate will be positive under normal conditions. A growing number of countries have already set a positive buffer as a base rate. The base rate of the neutral positive countercyclical buffer for the mentioned countries varies between 1% and 2%. The National Bank is studying the international experience of establishing a neutral positive countercyclical buffer and will determine the size of the buffer at the next committee meeting.
The Financial Stability Committee considers it important for the financial sector to accumulate capital buffers for use in stressful periods during high economic growth and has left the countercyclical buffer requirement unchanged at 0% until the revised methodology is approved.
The next session of the Financial Stability Committee will be held on March 15, 2023.