Review of the New European System of Financial Supervision (ESFS), Part 2: The work of the European Systemic Risk Board – The ESFS'S Macro-Prudential Pillar (original) (raw)

Financial Stability Board: Mandate and Implementation of Its Systemic Risks Standards

International Journal of Financial Studies, 2014

The aim of this essay is to provide an overview of the Financial Stability Board's (FSB) mandate and tools to safeguard financial stability and reduce systemic risks based on the methodological perspective of a legal analysis. It examines some of the recommendations that the FSB has published, with the aim of enhancing financial stability. In the second part of the paper, the complex problems that arise from implementing soft law recommendations, and the discretion granted to regulatory authorities, are discussed.

The Mandate of the European Systemic Risk Board and Resilience as an Essential Component: Part 1

2015

An article in JIBLR Issue 1, 2016 explored the macro-prudential mandate of the European Systemic Risk Board (“ESRB”) as set out in its founding regulation; assessed critically how it fits within the supporting rationales of financial supervision; and considered whether it should be redefined so as to reflect these rationales. It argued that in addition to prevention or mitigation of systemic risks, building the resilience of the financial system should be a core component of the macro-prudential supervisor’s mandate and, accordingly, should be clearly stipulated in the ESRB mission. This continuation article sets out the nature and key elements of resilience as developed in other disciplines and examines to what extent they are helpful in defining resilience in the sphere of macro-prudential supervision.

The Consequences of the Single Supervisory Mechanism for Europe's Macro-Prudential Policy Framework

SSRN Electronic Journal, 2013

The consequences of the single supervisory mechanism for Europe's macro-prudential policy framework + Disclaimer: The views expressed in the Reports of the Advisory Scientific Committee are those of the authors and do not necessarily reflect the official stance of the ESRB or its member organisations. In particular, any views expressed in the Reports of the Advisory Scientific Committee should not be interpreted as warnings or recommendations by the ESRB as provided for in Art. 16 of Regulation (EU) No 1092/2010 of 24 November 2010, which are subject to a formal adoption and communication process. Reproduction is permitted provided that the source is acknowledged. Reports of the Advisory Scientific Committee September 2013 The consequences of the single supervisory mechanism for Europe's macro-prudential policy framework The consequences of the single supervisory mechanism for Europe's macro-prudential policy framework

The New Financial Stability Architecture in the EU

SSRN Electronic Journal, 2000

After the introduction of the euro in 1999, the debate on the financial stability architecture in the EU focused on the adequacy of a decentralised setti ng based on national responsibilities for preventing and managing crises. The Financial Services Action Plan in 1999 and the introduction of the Lamfalussy process for financial regulation and supervision in 2001 enhanced the decentralised arrangements by increasing significantly the level of legal harmonisation and supervisory cooperation. In addition, authorities adopted EU-wide MoUs to safeguard cross-border financial stability. In this context, the financial crisis has proved to be a major challenge to the ongoing process of European financial integration. In particular, momentous events such as the freezing of interbank markets, the loss of confidence in financial institutions, runs on banks and difficulties affecting cross-border financial groups, questioned the ability of the EU financial stability architecture to contain threats to the integrated single financial market. In particular, the crisis has demonstrated the importance of coupling to micro-prudential supervision a macro dimension aimed at a b road and effective monitoring and assessment of the potential risks covering all components of the financial system. In Europe, following the de Larosière Report, the European Commission has put forward proposals for establishing a European System of Finan cial Supervision and a European Systemic Risk Board, the latter body to be set up under the auspices of the ECB. While the details for the implementation of these structures still need to be spelt out, they should reinforce significantly-ten years after the introduction of the euro-the financial stability architecture at the EU level.

Overcoming Systemic Financial Risks in Europe: Contested Policy Responses

2010

The monumental crisis of global financial markets since 2007 and the current economic downturn have not only led to significant changes in debates about financial and economic regulation but also brought an enormous amount of regulatory reform proposals on the agenda. While critics of neoliberalism urge fundamental policy change in a situation of an open 'policy window' to establish a completely new global financial system based on a 'New (Green) Deal', on tight regulation and systems' diversity, ordoliberals -in their attempt to stop such reforms -demand caution against overregulation and warn of negative or even unintended consequences of responses not awaiting major economic recovery. This paper identifies 'shadow banks' and the so-called innovative financial instruments as major sources of systemic financial risk resulting from the underlying trends of financialization and focuses then on the EU's reactions to these two areas of financial risk regulation, namely the regulatory proposal for Over-the-Counter derivatives (amendment to the Capital Requirements Directive) and the draft Directive on Alternative Investment Fund Managers. Based on classical structural power arguments in relation to the controversies between different models of financial systems in EU member states, the EU's role in supporting financial integration in the Common Market, regulatory competition (especially between the world's largest financial centers) and considering contemporary (better) law-making practices, the paper takes a critical view on the likelihood of a fundamental policy change and argues that we should not expect a too radical change but more a moderate reformulation of neoliberalism in terms of its ordoliberal conceptualization. In the final part it outlines and discusses some ideas for a financial system based on an interpretation of the precautionary principle for the financial sector (e.g. financial product safety commission, downsizing financial institutions) and asks about the EU's capacities to establish such institutional firewalls against future systemic risks.

An Overview of Micro-and Macroprudential Policy Tools in the EU in the Times of the COVID-19 Pandemic Economic Shock

Studia Europejskie - Studies in European Affairs, 2021

The financial crisis from 2008 and the following Eurozone crisis from 2012 created an incentive to establish a system of financial supervision at the European Union ("EU") level, due to the fact that the policy tool commonly used turned out to be ineffective. With regards to banking supervision, the package of legislations: "CRR/CRD" and "BRRD" has been adopted as a response to fi nancial system shortcomings, in order to make it more resilient and harmonised. One of the challenges was to take control of the so-called: "too big to fail" financial institutions, therefore next to macroprudential supervision, microprudential policy pools were introduced. This constituted the phenomena of the shift from regulationbased supervision to risk-based supervision with the aim of reducing the systemic risk in each and every EU Member State and, in turn, prevent possible future crises. In this paper, those methods will be gathered, presented, and discussed in the light of the current COVID-19 pandemic crisis.

Risk management through the lens of macroprudential policy

is an economist at the ESRB Secretariat. Previously, he worked at the UK Financial Services Authority in the financial stability department, where he specialised in bank stress tests and financial network analysis. He attended the universities of Oxford and London.