A Building Block Approach for Introducing a Positive Neutral Countercyclical Capital Buffer in Albania
Selected Issues Papers, December 29, 2025
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- A Building Block Approach for Introducing a Positive Neutral Countercyclical Capital Buffer in Albania
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Bibliographic details
- Authors: Maximilian Fandl, Giorgia De Nora, Eugena Topi
- Published: December 29, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229035132.018
Overview
- Purpose: Discusses introduction of a positive neutral countercyclical capital buffer (CCyB) for Albania using a building block, step-by-step guide to assess preconditions.
- Application: Applied to the case of Albania; provides a template for emerging markets to explore positive neutral CCyB regimes.
- Authors: Maximilian Fandl, Giorgia De Nora, Eugena Topi
- Date: December 29, 2025
Methods and Analytical Approach
- Building block approach: Step-by-step guide to assess institutional and data preconditions required to implement a positive neutral CCyB.
- Calibration methods employed:
- Quantile local projection.
- Stress-test based approach.
- Scope: Focus on calibration of a positive neutral rate and evaluation of feasibility and net benefits for Albania.
Key Findings
- Feasibility and benefits:
- The paper finds a positive neutral CCyB regime is feasible and net beneficial for Albania.
- Calibrated range:
- Identifies the adequate range of the positive neutral rate between 100-200bps.
- Broader applicability:
- Provides a template for emerging markets to explore positive neutral CCyB regimes.
Policy Recommendations and Implications
- Implement a building block assessment to verify preconditions before introducing a positive neutral CCyB.
- Use a combination of quantile local projection and stress-test based approaches for calibration of the neutral rate.
- Consider adopting a positive neutral CCyB within the identified range of 100-200bps for Albania, subject to country-specific preconditions and monitoring.
Content in this bundle
- Sipea2025154