Slovak Republic: Financial Sector Assessment Program-Technical Note on Macroprudential Policy Framework and Tools

This technical note focuses on macroprudential policy framework and tools as part of the Slovak Republic’s Financial Sector Assessment Program. The institutional framework for macroprudential policy in Slovakia aligns broadly with the IMF guidance for effective macroprudential policymaking. The willingness to act could be further enhanced by adopting and publishing a macroprudential strategy and incorporating external advisors into the policy-making process. Operational capacity is generally high but could be improved at the margins by closing data gaps in the residential real estate and commercial real estate (CRE) sectors and by developing a macrofinancial model. The recent availability of real estate transaction data provides an opportunity to revise the macroprudential framework with a greater emphasis on mitigating the procyclicality of credit and house price growth, while keeping the principle focus on the structural built-up of resilience. The Národná banka Slovenska should be prepared to activate the systemic risk buffer if risks in the CRE sector become systemic and should maintain close oversight of real estate funds.