The NCMO meeting of 20 June 2023
This year’s second meeting of the General Board of the National Committee for Macroprudential Oversight (NCMO) was held on 20 June 2023.
During the meeting, Board members examined analyses and adopted measures concerning macroprudential policy and systemic risk, namely: (i) examining the regular analysis on the recalibration of the countercyclical capital buffer, (ii) designating the Republic of Moldova as a material third country for the banking sector in Romania in terms of recognising and setting countercyclical buffer rates, (iii) not applying through voluntary reciprocity the macroprudential policy measures adopted by Norway, set forth in Recommendation ESRB/2023/1, (iv) assessing the cross-border effects of macroprudential measures, following the submission of the compliance report in relation to Recommendation ESRB/2015/2, as well as (v) approving the method of implementing domestically Recommendation ESRB/2021/17 on a pan-European systemic cyber incident coordination framework (EU-SCICF) for relevant authorities.
The NCMO General Board was informed of: (i) the regular analysis on the systemic risk buffer (SyRB); (ii) developments in the commercial real estate market in Romania and the publication of Recommendation ESRB/2022/9 of 1 December 2022 on vulnerabilities in the commercial real estate sector in the European Economic Area, (iii) the systemic risks to financial stability identified by member authorities as per their specific area of competence, with 31 March 2023 as reference date, (iv) the assessment of Romanian competitive companies with domestic capital that operate in strategic sectors, identified based on the previous analyses of NCMO working groups, and (v) the stress test results for private pension funds in Romania.
NCMO Recommendation No. R/2/2023 on the countercyclical capital buffer in Romania was unanimously approved. Specifically, the National Bank of Romania is recommended to keep in place the measure to set the countercyclical buffer rate at 1 percent as of 23 October 2023. Behind this decision stood mainly the international environment still deeply riddled with uncertainty, the persistence of domestic imbalances, as well as the fact that eligible borrowers’ access to finance was not negatively influenced by the application of the buffer, the annual growth rate of lending remaining positive, albeit posting a slight slowdown, while the liquidity and profitability levels of the banking sector continued to be substantial. In order to strengthen financial system resilience and the real economy’s capacity to recover, amid the geopolitical turmoil, it is mandatory to ensure the adequate build-up of capital reserves by credit institutions. The National Bank of Romania is recommended to further monitor developments in the economy and lending, following the multiple sources of uncertainty internationally and regionally.
In addition, at the NCMO meeting, a decision was issued on developing the cooperation framework laid down in Recommendation ESRB/2021/17 on a pan-European systemic cyber incident coordination framework (EU-SCICF) for relevant authorities. With a view to implementing the provisions of Recommendation ESRB/2021/17, the NCMO decided to set up a standing inter-institutional working group within the Technical Committee on systemic risk, which will facilitate the development of the cooperation framework among relevant institutions at national and European levels. The working group will comprise representatives of the authorities with responsibilities in the field, namely: the National Bank of Romania, acting as the main point of contact under Recommendation B of Recommendation ESRB/2021/17, the Financial Supervisory Authority, the Government of Romania and the Cyber Security National Directorate, which is subordinated to the Government.
The members of the NCMO General Board also unanimously decided to designate the Republic of Moldova as a material third country for the banking sector in Romania in terms of recognising and setting countercyclical buffer rates, as well as not to apply through voluntary reciprocity the macroprudential policy measures adopted by Norway.
The NCMO was established by virtue of Law No. 12/2017 on the macroprudential oversight of the national financial system, thus ensuring that Recommendation of the European Systemic Risk Board (ESRB) No. 3/2011 on the macroprudential mandate of national authorities was implemented. The NCMO brings together representatives of the National Bank of Romania, the Government of Romania and the Financial Supervisory Authority. 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.