Experiences from the MNB's Green Preferential Capital Requirement Programme and the Extension of the Programme

Kim, Donát and Raciborski, Eszter and Várgedő, Bálint (2024) Experiences from the MNB's Green Preferential Capital Requirement Programme and the Extension of the Programme. FINANCIAL AND ECONOMIC REVIEW, 23 (3). pp. 193-209. ISSN 2415-9271

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Abstract

The study examines the Green Preferential Capital Requirement Programmes of the Magyar Nemzeti Bank, with a special focus on their extension, and presents the information on which the decision is based, the theoretical background of the programmes, the international regulatory environment, the mechanism of the preferential capital requirement and the results of the programmes. The results and feedback from market participants suggest that the preferential capital requirement programmes have a market and institutional development impact across the f inancial institutions system. From a prudential perspective, the green preferential capital requirement programmes did not have a material negative impact: they reduced banks’ capital requirements by up to 0.31 per cent only. In view of the positive results, having been extended for a uniform period, these programmes are expected to continue to encourage green lending.

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