A Building Block Approach for Introducing a Positive Neutral Countercyclical Capital Buffer in Albania
December 29, 2025
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The paper discusses the introduction of a positive neutral countercyclical capital buffer (CCyB) for Albania. The building blocks present a step-by-step guide to assess preconditions to be in place. Applied to the case of Albania, authors employ a set of methods for the calibration of a positive neutral rate, including a quantile local projection and stress-test based approach. The paper (i) finds a positive neutral CCyB regime is feasible and net beneficial for Albania, (ii) identifies the adequate range of the positive neutral rate between 100-200bps, and (iii) provides a template for emerging markets to explore positive neutral CCyB regimes.
Subject: Bank soundness, Capital adequacy requirements, Commercial banks, Countercyclical capital buffers, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Stress testing, Systemic risk
Keywords: Bank soundness, building block approach, Capital adequacy requirements, Commercial banks, countercyclical capital buffer, Countercyclical capital buffers, Europe, IMF country, IMF staff, issues paper, local projection, macroprudential policy, releasable capital buffer, stress test, Stress testing, Systemic risk
Pages:
23
Volume:
2025
DOI:
Issue:
154
Series:
Selected Issues Paper No. 2025/154
Stock No:
SIPEA2025154
ISBN:
9798229035132
ISSN:
2958-7875
