45th meeting of the Financial Market Stability Board

The 45th meeting of Austria’s Financial Market Stability Board (FMSB) took place on June 4, 2025. The FMSB recommended to keep the countercyclical capital buffer (CCyB) at a rate of 0%. Investment funds rely on leverage only to a limited extent, but for real estate funds, liquidity risks remain high.

Countercyclical capital buffer

The FMSB recommends that the Financial Market Authority (FMA) maintain the CCyB at its current rate of 0% of risk-weighted assets. At –14 percentage points, the credit-to-GDP gap, i.e. the difference between the credit-to-GDP ratio and its trend, again remained below the critical threshold of 2 percentage points in the fourth quarter of 2024.

In its meeting, the FMSB adopted a new methodology for assessing cyclical risks and calibrating the CCyB. The credit-to-GDP gap will be supplemented with other indicators for cyclical risks, which is in line with a recommendation by the European Systemic Risk Board (ESRB). A CCyB rate of 0% would also be recommended under the new methodology. For details about the new methodology, see the OeNB’s website. The FMSB will be applying it from the 46th FMSB meeting on October 1, 2025, onward.

Investment funds

Risks arising from the use of leverage in alternative investment funds (AIFs) were also discussed by the FMSB. Austrian AIFs rely on leverage only to a limited extent – particularly in an EU comparison. Consequently, leverage financing does not pose any systemic risks for the financial system or for long-term economic growth.

However, real estate funds show large liquidity mismatches, which are also striking compared to the rest of the EU. These mismatches were already addressed through an amendment of Article 11 of the Austrian Real Estate Investment Fund Act, entering into force on January 1, 2027. A hurdle rate would be at odds with the purpose of this amendment.