The Countercyclical Capital Buffer (CCyB) rate for the third quarter of 2020 has been set at zero per cent

Summary

Based on the analysis of the reference indicators, the Bank of Italy has decided to keep the countercyclical capital buffer rate at zero per cent for the third quarter of 2020. Specifically:

• In the first quarter of 2020, the deviation of the total credit-to-GDP ratio from its long-term trend (the credit-to-GDP gap) was broadly negative, by about -15 percentage points using the standard methodology set by the Basel Committee on Banking Supervision, and by about -8 percentage points according to the methodology developed by the Bank of Italy, which takes into account the specific features of Italy's credit cycle. Similar findings emerge from the analysis of the bank credit-to-GDP gap;

• Other indicators confirm that the Italian financial cycle remains weak. The growth rate of bank lending to households has decreased sharply, while that to firms has turned positive again due to firms' greater liquidity needs following the halt in production activities. Although the stock of non-performing loans to firms is falling, it remains high. The real sector indicators closely connected with developments in macroeconomic-financial conditions are also providing similar signals: the marked decrease in the unemployment rate is due to the sharp fall in the number of people looking for work during the public health emergency, and real property prices are still well below their long-term level.