In its semi-annual Financial Stability Report, Norges Bank assesses vulnerabilities and risks in the financial system. The Report for the first half of 2024 mainly includes analyses of banks and financial institutions. 

The rise in interest rates has curbed activity in the Norwegian economy, but employment is still at a high level. Geopolitical tensions are still high.  

“The international and Norwegian economy have both held up better in the face of high inflation and higher interest rates than many had feared. Most households and firms have so far had sufficient finances to cope with higher expenses, and employment remains at a high level. At the same time, there is still an elevated risk that negative events could occur and weaken financial stability”, says Deputy Governor Pål Longva. 

Banks’ losses are low, profitability is high and banks satisfy capital and liquidity requirements by an ample margin. It is important that banking sector resilience is maintained.  

Norges Bank’s Monetary Policy and Financial Stability Committee decided to keep the countercyclical capital buffer rate unchanged at 2.5 percent and to advise the Ministry of Finance to keep the systemic risk buffer requirement unchanged at 4.5 percent. 

“The countercyclical capital buffer and the systemic risk buffer help ensure that banks are well positioned to absorb higher losses. In the event of a severe downturn, buffer requirements can be reduced to mitigate the risk of banks tightening credit standards and exacerbating the downturn”, says Deputy Governor Pål Longva.