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ESRB and FSC

European Systemic Risk Board (ESRB) and Financial Stability Committee (FSC)

The Bundesbank plays a key role in the work of the European Systemic Risk Board (ESRB) and the European Financial Stability Committee (FSC). Its delegates are members of many substructures and expert groups and are involved in methodological and conceptual work as well in risk and instrument analyses. This means that the Bundesbank's involvement in macroprudential supervision in Europe is major, and that it can play an active role in shaping ECB/SSM policy.

European Systemic Risk Board (ESRB)

The European Systemic Risk Board (ESRB) is part of the European System of Financial Supervision (ESFS) and took up its work at the beginning of 2011. The ESRB is responsible for the macroprudential oversight of the entire EU financial system; this means that it helps to avert and mitigate systemic risk and to contain the spread of financial distress. If it identifies serious risks or imbalances in the European financial system, it can issue warnings and recommendations to the EU, the EU member states or the European and national supervisory authorities. These warnings and recommendations may be communicated either confidentially or publicly. Recommendations include concrete measures to combat any risks or imbalances that have been detected. Although these recommendations are not legally binding, the addressee must explain convincingly why measures were rejected. If the recommendations are accepted, their implementation is monitored by the ESRB (see Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macroprudential oversight of the financial system and establishing a European Systemic Risk Board).

The ESRB's central decision-making body is the General Board. It consists of 69 members, of which 39 have voting rights. Decisions on warnings and recommendations are taken by a two-thirds majority. The General Board's members are the ECB President and Vice-President, the presidents and governors of all EU national central banks, the chairs of the European supervisory authorities (EBA, EIOPA and ESMA) and one high-ranking representative each of the national competent authorities (NCAs), a member of the European Commission and the chair of the Economic and Financial Committee (EFC).

Financial Stability Committee (FSC)

Upon the entry into force of the SSM Regulation, the ECB was also given macroprudential powers. The ECB's macroprudential tasks are confined to SSM banks and concern, in particular, the possibility of applying more stringent macroprudential tools (see Article 5 of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions).

The Financial Stability Committee (FSC) can meet in various compositions and, with the involvement of European and national supervisory authorities as well as national central banks ("SSM composition"), plays a key role in the performance of these tasks. It continuously analyses the risk situation in the SSM area and at the national level and is tasked with identifying macroprudential imbalances and with selecting and calibrating the appropriate macroprudential tools for eliminating these imbalances. The FSC's analyses and decision proposals form the basis for the ECB Governing Council's macroprudential decisions.

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