In 2022 and the first half of 2023, amidst high uncertainty caused by a potential energy crisis, turning credit and real estate cycles and turbulence in the US and Swiss banking sectors, the NBB decided to maintain the CCyB at 0% to ensure that Belgian banks had full flexibility to use their ample available capital to raise credit provisions in a pro-active way and to support the real economy. This uncertainty has since dissipated to a significant extent. Moreover, the downturn in the Belgian credit and real estate cycles has been quite orderly so far, not in the least due to the moderate lengthening of mortgage maturities (welcomed by the NBB) which has helped offset the negative impact of higher interest rates on the affordability of new mortgage loans.

Against this backdrop, the NBB will consider re-activating the CCyB for the quarter starting on 1 October 2023 based on an analysis weighing the costs of procyclicality against the benefits of heightened resilience of the Belgian banking system to potential losses. The pass-through of tighter financial conditions to the real economy is a gradual process, one that is still ongoing. Banks therefore remain exposed to unexpected losses from the materialisation of risks that remained below the water line when interest rates were low, credit and liquidity conditions ample and asset prices high. As banks’ credit risk provisions for expected losses have fallen back to levels seen before the pandemic, re-activation of the CCyB would increase their resilience to potentially higher than expected losses.

As part of this assessment, the NBB will also prepare for the extension – albeit at a level somewhat lower than the current 9% – of the sectoral systemic risk buffer for Belgian mortgage loans. This buffer is set to expire in April 2024. Recalibration is now possible owing to the success of the Belgian mortgage loan supervisory expectations, which were introduced in 2020, as confirmed by the most recent “comply or explain” reports of banks and insurance companies.    

CCyB decisions are revisited each quarter, in accordance with European regulations and the NBB’s macroprudential powers under the 2014 Banking Act.