Banco de España Proposes to Increase Countercyclical Capital Buffer to 1.0%
Madrid, 8 July 2025 – The Banco de España has today announced the commencement of a public notice procedure with the aim of raising the countercyclical capital buffer (CCyB) rate to 1.0%. This proposed increase is scheduled to take effect from the fourth quarter of 2025, signalling a proactive approach to bolstering the resilience of the Spanish banking sector in anticipation of potential future economic cycles.
The countercyclical capital buffer is a crucial macroprudential tool designed to absorb potential losses in periods of excessive credit growth. By requiring banks to hold additional capital during times of economic buoyancy, the CCyB aims to prevent the build-up of systemic risk and mitigate the impact of financial downturns. A higher buffer essentially creates a larger cushion for banks to withstand shocks, thereby safeguarding financial stability.
The decision to initiate this procedure reflects the Banco de España’s ongoing assessment of the prevailing economic conditions and its commitment to maintaining a robust financial system. While the specific drivers behind this proposed increase will be detailed in the forthcoming public consultation documents, it is generally understood that such measures are often implemented when there are indications of an overheating economy or a significant increase in credit volumes that could pose risks to financial stability down the line.
The public notice procedure is a standard and important step in the regulatory process, allowing stakeholders to review the proposal and provide their feedback. This engagement ensures transparency and incorporates diverse perspectives into policy decisions. It is anticipated that banks, industry associations, and other interested parties will have the opportunity to contribute to the consultation process.
Following the conclusion of the public notice period and the subsequent review of feedback, the Banco de España will make a final determination on the implementation of the increased CCyB rate. The proposed transition to 1.0% from the fourth quarter of 2025 provides a clear timeframe for financial institutions to adjust their capital management strategies accordingly.
This move by the Banco de España underscores its dedication to prudent financial regulation and its forward-looking strategy to ensure the stability and soundness of the Spanish banking system, thereby contributing to the broader economic well-being of the country.
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Bacno de España – News and events published ‘The Banco de España launches the public notice procedure to increase the countercyclical capital buffer rate to 1.0% from 2025 Q4’ at 2025-07-08 08:00. Please write a detailed article about this news in a polite tone with relevant information. Please reply in English with the article only.