Since 8 October 2018, the Bank of Russia applies a new approach to macroprudential regulation. In accordance with this approach, risk ratios on certain asset types established by Bank of Russia Instruction No.
Pursuant to the new approach, risk-weight add-ons used to calculate credit institutions’ capital adequacy ratios are established by the decision of the Bank of Russia Board of Directors (previously, this required amendments to the effective prudential regulation of credit institutions). The decision of the Bank of Russia Board of Directors on increasing risk-weight add-ons becomes effective no earlier than two months after its publication.
Risk-weight add-ons are applied to certain asset types specified in Bank of Russia Ordinance No.
This Bank of Russia Ordinance was approved to replace Bank of Russia Ordinance No.
In order to reduce the dollarisation and risks associated with foreign currency lending, on 8 October 2018, the Bank of Russia raised risk-weight add-ons for corporate foreign currency loans depending on legal entities’ annual foreign currency earnings. These measures are also applicable to legal entities’ investment in debt securities issued in foreign currency.
The Bank of Russia applies the instrument of macroprudential buffers in an extensive way. Over the period of
Higher risk ratios for certain credit claims increase banks’ capital buffers needed to cover possible losses. Banks may use these buffers during crisis periods.