WILLEMSTAD – The Centrale Bank van Curaçao en Sint Maarten (CBCS) is considering requiring commercial banks to maintain an additional capital buffer that could be released during an economic or financial crisis, giving banks more room to absorb losses while continuing to provide credit to households and businesses.
The measure under consideration is the countercyclical capital buffer, commonly known as the CCyB. It forms part of the Basel III framework developed internationally following the global financial crisis of 2008-2009.
The Basel Committee on Banking Supervision says the buffer is intended to protect banking systems against periods of excessive credit growth that can lead to an accumulation of risks. Banks build up additional capital when conditions are favorable, which can subsequently be released when the financial system comes under stress.
For Curaçao and Sint Maarten, the introduction of such an instrument has been under preparation for several years. An IMF assessment published in 2021 noted that the CBCS was already the designated macroprudential authority but that its broader framework was still at an early stage and did not yet include a countercyclical capital buffer.
That is now changing.
The CBCS said in its 2026 Financial Stability Report that it is working on the CCyB as part of efforts to strengthen the financial system. The Central Bank describes the instrument as a way of accumulating additional buffers during periods of excessive credit growth and releasing them during downturns so banks can continue financing the real economy.
The buffer is currently effectively set at zero, meaning banks do not presently have an additional CCyB specifically available for release if an unexpected crisis occurs. The CBCS is therefore examining whether circumstances justify establishing a positive rate.
Under the Basel framework, authorities traditionally calibrate the buffer within a range of zero to 2.5 percent of risk-weighted assets, although individual jurisdictions can adopt different approaches within their regulatory frameworks.
A positive buffer would not necessarily mean that the CBCS believes a financial crisis is imminent. Rather, the principle behind the CCyB is to build resilience before problems arise.
The experiences of recent years illustrate why such preparation can matter for small Caribbean economies. Hurricanes Irma and Maria severely disrupted economic activity in parts of the monetary union, while the COVID-19 pandemic caused another unprecedented shock.
During severe downturns, banks can face rising problem loans, weaker profitability and slower credit growth. If banks respond by sharply reducing lending to protect their capital positions, the economic downturn itself can become worse.
The CCyB is designed to reduce that risk by giving supervisors capital that can deliberately be released during periods of stress.
The IMF has previously supported the CBCS's move toward such a macroprudential instrument. In its 2025 Article IV assessment, the Fund said the CBCS was developing a broader toolkit, beginning with introduction of the CCyB in 2026, followed by additional measures aimed at risks involving households and mortgages.
The eventual rate has not yet been announced. The CBCS is expected to base its decision on several indicators, including credit developments, bank capitalization, real estate conditions, emerging financial vulnerabilities and stress-test results.
If introduced above zero, the measure would mark an important change in the way the CBCS prepares the banking system of Curaçao and Sint Maarten for future economic shocks.