A Building Block Approach for Introducing a Positive Neutral Countercyclical Capital Buffer in Albania

Author: Maximilian Fandl, Giorgia De Nora, and Eugena Topi

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.

Volume/Issue: Volume 2025 Issue 154

Publication date: December 2025

ISBN: 9798229035132

$15.00

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Topics covered in this book

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Banks and Banking , Finance , Money and Monetary Policy , macroprudential policy , countercyclical capital buffer , releasable capital buffer , local projection , stress test , IMF staff , IMF country , issues paper , building block approach , Countercyclical capital buffers , Bank soundness , Capital adequacy requirements , Commercial banks , Stress testing , Systemic risk , Europe

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Summary

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.