European Systemic Risk Board (ESRB)
The ESRB is responsible for macroprudential policy concerning the financial system of the European Union (EU) and works to prevent and reduce risks to the stability of the financial system. Participation in the ESRB gives the Riksbank the opportunity to influence issues related to financial stability in the EU, as well as to share and contribute knowledge, information and experience in this area.
In order to fulfil its macroprudential policy mandate, the ESRB oversees and evaluates potential risks to the stability of the EU financial system, covering all financial institutions, markets, products and market infrastructures within the Union. The ESRB also works to identify and analyse connections between these that could create system risks.
If the ESRB identifies significant systemic risks, the General Board of the ESRB may decide to issue a warning in order to draw attention to these. The warning may be addressed to the EU as a whole, to individual Member States, to the European supervisory authorities or to national authorities. The ESRB oversees the identified risks and vulnerabilities, as well as the actions taken to address them. If the ESRB deems it appropriate, it may also issue a recommendation on how and within which time frame the addressee should act to deal with a material systemic risk. The ESRB will formally follow up whether the addressee has complied with the recommendation. An addressee that has not done so must explain why.
Another of the ESRB’s tasks is to evaluate and provide feedback on planned national macroprudential measures. It is also common to consult the ESRB on various issues where a macroprudential policy perspective is needed, either because an EU institution has requested the views of the ESRB or because the legislation requires it. The ESRB also works with the EU’s three authorities for microprudential policy* on the EU level (European Supervisory Authorities, ESAs) to carry out stress tests to assess the resilience of financial institutions, markets or infrastructures. Among other things, the ESRB contributes to this cooperation by designing the hypothetical scenarios for economic and financial market developments that form the basis of the stress tests.
Forms for decision-making and participation
The broad mandate of the ESRB is reflected by its membership, which comprises central banks and supervisory authorities from all EU Member States, Iceland, Liechtenstein and Norway, the ECB, the three European supervisory authorities (EBA, EIOPA and ESMA), the Single Supervisory Mechanism (SSM), the European Commission and the Economic and Financial Committee, the Single Resolution Board (SRB) and the ESRB Advisory Scientific Committee (ASC).
The decision-making body of the ESRB is its General Board, chaired by the President of the ECB. The General Board discusses current macroprudential issues and votes, if necessary, to issue warnings and recommendations by majority decision and to publish reports, consultation responses and so on. A press release reports the main conclusions of the General Board meeting. The General Board normally meets four times a year, but more often if appropriate.
All members are represented on the General Board. A Steering Committee contributes to the preparation of Board meetings by discussing the ESRB policy agenda and analyses and other material from the ESRB Advisory Technical Committee and Advisory Scientific Committee.
* The European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA).