Publication of Account - Macroprudential Measures Committee first meeting of 5 September 2016

• Consideration of evidence from the evaluation of mortgage market measures
• List of other systemically important institutions and setting of capital buffer rates agreed
• Agreement for countercyclical capital buffer to remain unchanged from zero

Click here to see the account of 5 September

The Central Bank is the designated national macroprudential authority in Ireland.  A key part of its role is to safeguard stability and contribute to the long term resilience of the financial system.  The Central Bank’s new Macroprudential Measures Committee (MMC) met for the first time on 5 September 2016.  The Committee’s role is to advise on the regular reviews of bank-related national macroprudential measures and make recommendations about maintaining or revising these rules as appropriate.  In order to increase understanding and transparency, a record of the meeting is published.

In order to safeguard stability several macroprudential measures have been activated via the banking system since 2015.  These include: borrower-based measures such as mortgage rules; the countercyclical capital buffer (CCyB); other systemically important institution (O-SII) buffer; and reciprocation of macroprudential policy measures taken by other EU Member States. 

At its first meeting, the MMC:  

• Agreed Terms of Reference for the new Committee along with a communication approach which undertook to publish a summary record of its first meeting within six weeks.  It was further agreed that such a record will take into account statutory and notification obligations around publication of specific discussions and recommendations;^[1]
• Considered a summary of the evidence to date from the evaluation of the Central Bank’s mortgage market measures as well as submissions to the recent public call for evidence.  It was agreed to hold further discussions of the analytical and policy work;
• Discussed the review currently underway of the identification of O-SIIs in Ireland and the setting of buffer rates on these institutions.  The discussion concluded with MMC agreement with the proposed list of O-SIIs, O-SII buffer rates and associated phase-in period for the 2016 review of the O-SII framework.  It was recommended to proceed with notifying the ECB of the proposal in line with the required notification process under the SSM Regulation; and
• Reviewed the CCyB rate on Irish exposures and agreed on no change at this juncture to the zero rate.  It was recommended to proceed with notifying the ECB of the proposal in line with the required notification process.

Notes to editors

• The annual review of the O-SII buffer framework is required under the EU Capital Requirements Regulation and Directive IV (CRR/CRD IV).  The guiding principle behind the O-SII buffer is to minimise the effect that the failure of a systemically important institution would have on the domestic economy.
• The CCyB is a time-varying capital requirement for in-scope banks and investment firms under the EU CRR/CRD IV.  It is aimed at reducing the pro-cyclicality of the financial system and, more specifically, at protecting the banking sector from periods of excess aggregate credit growth that can be associated with the build-up of system-wide risk.  The Central Bank is the designated authority for setting the CCyB rate in Ireland and as such is required to set a rate, having consulted with the ECB, on a quarterly basis.

The Committee comprises:

• Governor
• Deputy Governor (Central Banking)
• Deputy Governor (Financial Regulation)
• Chief Economist
• Director of Credit Institutions Supervision
• Head of Financial Stability Division (Secretary)

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^[1] There are a range of notification and procedural requirements under the EU Capital Requirements Regulation and Directive IV (CRR/CRD IV) which vary by which instrument is being introduced.  In addition, under the notification requirements of the SSM Regulation, the ECB must be informally notified as early as possible of a national authority’s intention to introduce a macroprudential measure under CRR/CRD IV.  Formal notification to the ECB must then take place 10 working days before the final decision is made (the ECB must respond with objections within 5 working days of this).