COPENHAGEN (Reuters) - The Danish government has decided to introduce a so-called countercyclical buffer for banks of 0.5 percent, following a recommendation by the country’s Systemic Risk Council in December.
The buffer aims to force Danish banks to accumulate extra capital during boom periods on top of requirements set through other regulations, to better protect the financial system during downturns.
The government assessed that the requirement will not affect economic development as most banks already have sufficient capital to meet the new requirement, the business ministry said in a statement announcing the decision. Banks will have to meet the new requirement by March 31 next year.
Reporting by Teis Jensen; Editing by Susan Fenton