Macroprudential regulation and financial stability
Governor Øystein Olsen
Norwegian Savings Banks Association, 31 October 2013
Banks play a key role
Borrowers Savers
Banks
Securitisation resulted in complex and vulnerable structures
Borrowers
Agents
Lender
SPV Type I
SPV Type II
SPV Type III
Notes and short-term
paper Savers
Banks
Money market funds Rating
agencies
3
Total credit-to-GDP ratio
Kristiania crash 1899-1905
Banking crisis 1920-28
Banking crisis 1988-92
Financial crisis
5
4,5 4,5 4,5 4,5 4,5
2,5 2,5 2,5 2,5 2,5
2,0 3,0 3,0 3,0 3,0
1,0 2,0
2,5
2,5
2,5
0 2 4 6 8 10 12 14 16
0 2 4 6 8 10 12 14 16
1 July 2013 1 July 2014 1 January 2015 1 July 2015 1 July 2016 Maximum countercyclical capital buffer
Buffer for systemically important banks Systemic risk buffer
Capital conservation buffer Minimum requirements
New CET1 capital requirements for Norwegian banks
Sources: Ministry of Finance and Norges Bank
1. Banks should become more resilient during an upturn
2. The size of the buffer should be viewed in the light of other requirements applying to banks
3. Stress in the financial system should be alleviated
Criteria for an appropriate countercyclical
capital buffer
Key indicators
7
Credit GDP
Banks’ wholesale funding ratio
House prices Disposable income
Commercial property prices
Indicator Trend Mean Financial crises
Sources: Statistics Norway, IMF, Norwegian Association of Real Estate Agents (NEF), Association of Real Estate Agency Firms (EFF), Finn.no, Eiendomsverdi, Dagens Næringsliv, OPAK and Norges Bank
Section 3 of the Regulation relating to a countercyclical capital buffer
“[…] The basis for the buffer decision shall
contain an overview of the credit-to-GDP ratio and the extent to which it deviates from the
long-term trend, as well as other indicators, and
Norges Bank’s assessment of systemic risk that
is building up or has built up over time.”
-16 -12 -8 -4 0 4 8 12 16
-16 -12 -8 -4 0 4 8 12 16
1980 1985 1990 1996 2001 2006 2012
Credit gap Output gap
9
