The NCMO meeting of 14 June 2017

2017-Jun-16 | Meetings

On 14 June 2017, the second meeting of the General Board of the National Committee for Macroprudential Oversight (NCMO) took place. Participants in the meeting analysed issues concerning the assessment of cross-border effects of macroprudential measures taken in EU Member States, recalibration of the countercyclical capital buffer, assessment of the material third countries for the banking sector in Romania and the need to improve the statistical information underlying real estate market analyses.

  1. In virtue of Recommendation ESRB/2015/2 on the assessment of cross-border effects of and voluntary reciprocity for macroprudential policy measures, the NCMO has analysed the timeliness of implementing via voluntary reciprocity of macroprudential measures taken in EU Member States and decided that it is not necessary to reciprocate the macroprudential policy measures adopted by Belgium and Estonia in light of the fact that credit institutions in Romania have non-material eligible exposures to the former jurisdiction and exposures to the latter jurisdiction continue to be very low.
  2. In virtue of Recommendation ESRB/2014/1 on guidance for setting countercyclical buffer rates, the timeliness of recalibration of the countercyclical capital buffer was assessed, the most recent analyses showing that total indebtedness (of non-financial corporations and households) increased further, but is still below the indicative threshold. Against this backdrop, the NCMO has recommended the NBR to maintain the countercyclical capital buffer rate at zero percent and monitor developments in household indebtedness, also from the perspective of analysing the timeliness to implement macroprudential instruments ensuring sustainable household indebtedness. The NCMO will, on a regular basis, issue recommendations on the countercyclical capital buffer in Romania pursuant to applicable legislation at EU level.
  3. In virtue of Recommendation ESRB/2015/1 on recognising and setting countercyclical buffer rates for exposures to third countries, the NCMO has assessed the materiality of third countries to the banking sector in Romania from the standpoint of setting countercyclical buffer rates and has found that the exposures to third countries of the banking sector in Romania are further low and, hence, no material third countries were identified. Against this background, the NCMO has recommended the NBR to assess, on a regular basis, the third countries relevant for the banking sector in Romania in terms of recognising and setting countercyclical buffer rates, before suggesting any steps to be taken where such exposures become material.
  4. In virtue of Recommendation ESRB/2016/14 on closing real estate data gaps, the NCMO has assessed the need to broaden the scope of information originating in the residential real estate sector, considering that the real estate sector plays an important role in the economy. Thus, the NCMO has taken note of the NBR’s concern to gather more information on the risks originating in the residential real estate sector. At the same time, the NCMO has recommended the NBR and the FSA to collect information from the main investors on the commercial real estate market and financial institutions to cover data gaps for the physical market, as well as for the volume of investment in and financing of the real estate sector.

The schedule of meetings of the General Board of the NCMO from June 2017 to June 2018 was set as well. The next meeting is scheduled for 4 September 2017.

The National Committee for Macroprudential Oversight was established in virtue of Law No. 12/2017 on the macroprudential oversight of the national financial system, thus ensuring that Recommendation ESRB/2011/3 on the macro-prudential mandate of national authorities has been implemented. The NCMO brings together representatives of the National Bank of Romania, the Financial Supervisory Authority, and the Government of Romania. The NCMO’s mission is to ensure coordination in the field of macroprudential oversight of the national financial system by setting the macroprudential policy and the appropriate instruments for its implementation.