ArmInfo. The Central Bank of Armenia increased the countercyclical capital buffer (CCB) by 0.25% to 2.25% of risk-weighted assets (effective from May 2027), estimating the amount of additional capital needed to absorb unexpected losses from an expected shock of almost 250 billion drams. Central Bank of Armenia Chairman Martin Galstyan stated this in an interview with the research website Hetq (Sled). He noted that, for now, this amount will be sufficient to address potential future risks and scenarios for addressing emerging issues, citing assessments from macro-stress testing. "In recent years, the Central Bank, through one of its instruments – the CBC – has increased capital, indicating the need for additional capital in the event that the positive developments we are seeing cease at a certain time, or a certain reversal occurs. Banks would be prepared for these scenarios," Galstyan emphasized. When asked by the interviewer what the Regulator has provided for citizens in this case, the head of the Central Bank noted that, in the context of financial stability, the Central Bank does not have a mandate to demand a conscientious approach from citizens, but regularly encourages financial literacy and takes measures to increase awareness. "In addition to this, for the Central Bank to assume a paternalistic function of intervening in the decisions of every citizen, I note that the Central Bank does not have such a mechanism, and in fact, there are no countries in the world where the regulator has such a function," he noted.
As a reminder, on October 20, 2026, the Board of the Central Bank of Armenia decided to further increase the regulatory capital buffer (CCB) to 2.25% of risk-weighted assets, which will come into effect in May 2027. Prior to this, the CCB will be raised from the current 1.75% to 2% starting in February 2027 (according to the Central Bank's decision of July 28, 2026).
The Central Bank initially decided to introduce a supplement to banks' capital requirements—the countercyclical capital buffer (CCB)—on July 31, 2020, setting it at 0% of risk-weighted assets, effective August 2020. Since then, the CCB has been maintained at zero for over two years. Then, on October 24, 2022, the Central Bank Council decided to increase the CCB from zero to 1%, effective May 2023. Then, in May 2023, a decision was made to increase the CCF to 1.5% from August of that year and maintain that level until May 2025, after which a further increase to 1.75% followed.
The countercyclical buffer is necessary to cover bank losses in the event of extreme systemic risk in the banking sector. This buffer is aimed at supporting the stability of the banking sector. The change in the CCF (upward or downward) depends on macro-financial conditions, the degree of uncertainty, and the systemic risk scenario.
