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BaFin reduces countercyclical capital buffer to 0%

The Federal Financial Supervisory Authority (BaFin) has issued a general administrative act regarding the domestic countercyclical buffer rate. The rate was lowered from 0.25% to 0% with effect from 1 April 2020. This move was designed to enhance the resilience of the banking system under the present circumstances.

Developments regarding the spread of COVID-19 in Germany and the measures needed to contain the pandemic can potentially impair financial stability. The reduction in the countercyclical capital buffer is intended to address the current risk situation with a view to helping mitigate procyclical effects.

The German Financial Stability Committee (Ausschuss für Finanzstabilität) had previously welcomed a reduction in the buffer.