German macroprudential oversight strengthened German Federal Ministry of Finance, Bundesbank, BaFin and FMSA establish Financial Stability Committee

The newly formed Financial Stability Committee commenced its activities today. Its inaugural meeting, chaired by the Federal Minister of Finance, was attended by the President of the Deutsche Bundesbank, the President of the Federal Financial Supervisory Authority (BaFin) and the Chairman of the Management Committee at the Financial Market Stabilisation Agency (FMSA). The Committee was established under the Act to Strengthen German Financial Supervision (Gesetz zur Stärkung der deutschen Finanzaufsicht) of 28 November 2012 and will meet once every quarter in future.

The need to strengthen macroprudential (macroeconomic) oversight and better synthesise it with microprudential (institution-specific) supervision has been one of the key lessons learned from the financial crisis since 2008. Since then, macroeconomic surveillance has been intensified in various areas.

At European level, the European Systemic Risk Board (ESRB) was established at the ECB in Frankfurt and is responsible for keeping an eye on macroprudential developments in Europe. Relevant bodies must also be set up at national level. Surveillance at national level is particularly important in a monetary union consisting of different economies. The Financial Stability Committee ensures that Germany meets this requirement.

Based on the Bundesbank’s analyses, the Committee will discuss issues that are key to financial stability.

If risks are identified, the Committee can issue public or confidential warnings and recommendations. These may be addressed to the Federal Government, BaFin or other public sector bodies. The Committee will strengthen cooperation between the institutions that its members represent and also give advice on dealing with the ESRB’s warnings and recommendations.

The Federal Minister of Finance and the President of the Deutsche Bundesbank can attend Committee meetings in person. Regular members of the Committee are, representing the Federal Ministry of Finance, Dr Thomas Steffen, State Secretary, Dr Levin Holle, Head of the Financial Markets Policy Department and Dr Ludger Schuknecht, Director General, Economic Policy. Committee members belonging to the Deutsche Bundesbank are Sabine Lautenschläger, the Deputy President, Dr Andreas Dombret, Member of the Executive Board and Dr Karlheinz Bischofberger, Head of the Financial Stability Department. BaFin is represented by its President, Dr Elke König, Raimund Röseler, Head of Banking Supervision and Felix Hufeld, Chief Executive Director for Insurance Supervision. The FMSA is represented by the Chairman of the Management Committee, Dr Christopher Pleister.