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Slovak Banking Compliance Regulations Tighten Grip on Financial Stability

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The National Bank of Slovakia (NBS) has outlined its efforts to maintain financial stability in the country, with a focus on macroprudential policy. In this context, we take a closer look at the key regulations and measures being implemented.

Maintaining Financial Stability through Macroprudential Policy

According to Section 2(3) of the NBS Act, the central bank is mandated to contribute to the stability of the financial system. This mandate is reinforced by Section 1(2) and (3)(b) of the Financial Market Supervision Act, which requires the NBS to:

  • Identify risks to financial stability
  • Monitor and assess these risks
  • Actively mitigate them

Key Areas of Focus for the NBS

The NBS has identified two key areas in which it will focus its efforts to maintain financial stability:

Formulating Rules on Lending

The Housing Loan Act and Consumer Credit Act provide the statutory framework for rule-making, with specific rules laid down in the Housing Loan Decree and Consumer Credit Decree. These rules include limits on certain loan parameters aimed at making lending sustainable in the long term.

Increasing Banks’ Resilience

Slovakia’s banking sector is subject to stringent regulations, including those set out by the European Union’s Capital Requirements Regulation (CRR) and the country’s Banking Act. Banks are required to maintain capital buffers that meet EU standards, which will help them withstand potential risks and contingencies.

Compliance with EU Regulations

As a member of the European Union, Slovakia must comply with EU law, including directly applicable regulations such as the CRR and legislation transposed into Slovak law. This includes:

  • The Capital Requirements Directive
  • The Directive on credit agreements for consumers relating to residential immovable property
  • The Directive on credit agreements for consumers

The Role of the European Systemic Risk Board (ESRB)

The ESRB also plays a crucial role in maintaining financial stability within the EU. The ESRB issues recommendations and warnings on current risks as appropriate, which may be addressed to all EU countries or specific member states.