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Role of the Bundesbank in financial and monetary stability

Owing to its macroprudential mandate

The Financial Stability Act provides the legal framework for the German Financial Stability Committee (G-FSC), Germany's national macroprudential body. The Federal Ministry of Finance, Federal Financial Supervisory Authority (BaFin) and the Bundesbank each have three voting representatives on the G-FSC, while the Financial Market Stabilisation Agency has one non-voting advisory member.

The Bundesbank exercises key functions within the G-FSC. It analyses factors that are key to financial stability and identifies risks which could potentially impair financial stability. The Bundesbank makes proposals to the committee regarding the issuing of warnings and recommendations and evaluates their implementation by the recipients, ie the Federal Government, BaFin or another domestic public sector entity.

Owing to macroprudential surveillance at the European level

In addition to its key role in macroprudential oversight at the national level, the Bundesbank is closely integrated into the corresponding European structures. For one thing, the Bundesbank President is a voting member of the European Systemic Risk Board (ESRB), which is responsible for macroprudential oversight of the financial system of the entire EU. For another, the Bundesbank helps to implement financial stability measures within the euro area in the context of the Single Supervisory Mechanism (SSM). The Eurosystem has appointed a Financial Stability Committee (FSC) for this purpose, on which the Bundesbank is represented. Macroprudential measures in respect of banks can not only be issued nationally, but can also be strengthened by the European Central Bank (ECB). The decision on taking such measures is the responsibility of the Governing Council of the ECB.

Owing to membership of the European System of Central Banks

The Bundesbank is an integral component of the European System of Central Banks (ESCB) and, as such, is jointly responsible for price stability within the euro area. The central banks are very interested in properly functioning financial systems because the financial system, and banks in particular, play an important role in the monetary transmission process. The Bundesbank, by dint of its membership of the ESCB, also has an explicit mandate to contribute to financial stability without prejudice to the objective of price stability. However, the Bundesbank's co-responsibility for safeguarding financial stability also derives from its involvement in banking supervision and from its role in operating and overseeing payment systems.

Owing to the German IMF Act

Germany has been a member of the International Monetary Fund (IMF) since 1952. The legal basis for Germany's membership of the IMF is the Act on the Articles of Agreement of the International Monetary Fund (Gesetz zu dem Übereinkommen über den Internationalen Währungsfonds), or the German IMF Act. Under the Act, amongst other things, the Deutsche Bundesbank is required to discharge the financial rights and obligations incumbent on the Federal Republic of Germany by dint of its IMF membership and to settle all of Germany's financial dealings with the Fund. Moreover, the Bundesbank represents Germany on the IMF Board of Governors. In addition, the Bundesbank and the Federal Ministry of Finance take turns nominating the German IMF Executive Director and his/her deputy.