It sits on top of the 8% minimum own funds requirement and is maintained at the level of 2.5% of the total amount of risk exposure, which credit institutions are obligated to maintain in the form of common equity tier 1 capital. In contrast to other capital buffers, whose rates are calibrated by relevant national authorities, the rate of the capital conservation buffer was taken over from the Basel agreement and set out in the EU Capital Requirements Directive.
In Croatia, the requirement to maintain the capital conservation buffer at the rate of 2.5% is set out in Article 117 of the Credit Institutions Act. If an increase in the intensity of systemic risk within the financial system is identified, which could have severe negative implications for its stability and the economy of the Republic of Croatia, the CNB is authorised to raise the buffer rate above the prescribed level.