Financial stability legislation

Národná banka Slovenska is mandated by the NBS Act (Section 2(3)) to contribute to the stability of the financial system. In addition, the Financial Market Supervision Act (Section 1(2) and (3)(b)) mandates NBS to identify monitor, assess, and actively mitigate risks to financial stability. All of the Bank’s activities in this area are referred to collectively as macroprudential policy.

In conducting macroprudential policy, NBS focuses mainly on two areas:

• Formulating rules on lending: The aim is to make lending sustainable in the long term and make it more secure for both borrowers and lenders. The statutory framework for such rule-making comprises the Housing Loan Act and Consumer Credit Act. The rules themselves, including limits on certain loan parameters, are laid down in the Housing Loan Decree and Consumer Credit Decree.
• Increasing banks’ resilience: Banks build up different types of reserves that allow them to deal with contingencies and risks when they arise. These reserves notably include capital buffers whose rates are set in accordance with the EU’s Capital Requirements Regulation (CRR) and Slovakia’s Banking Act.

As a Member State of the European Union, Slovakia is subject to EU law, whether directly applicable regulations (e.g. the CRR), or other legislation transposed into Slovak law (e.g. the Capital Requirements Directive, the Directive on credit agreements for consumers relating to residential immovable property, the Directive on credit agreements for consumers, and its new version).

The stability of the European financial stability is also supported by the European Systemic Risk Board (ESRB), which issues recommendations and warnings on current risks as appropriate. These recommendations and warnings may be addressed either to all EU countries or specifically to certain countries.