12 December 2016

ECB contribution to the European Commission’s consultation on the review of the EU macroprudential policy framework

Comprehensive review of the framework

The ECB fully supports a comprehensive review of the macroprudential policy framework, in particular to align it with the latest institutional developments in the European Union. The primary objective of the review should be to enhance the effectiveness of the macroprudential policy framework without impeding the effectiveness of the other complementary policies. The review should encompass the relevant provisions included in EU legal acts. In this regard, it is important to reflect the new institutional landscape in the macroprudential policy framework, revise some specific powers of micro- and macroprudential authorities, streamline the coordination mechanism between authorities, simplify the activation of macroprudential policy tools and broaden the macroprudential toolbox to ensure authorities are enabled to address systemic risks in a timely and effective manner.

Banking union and macroprudential policy

The establishment of the banking union and the initiative to develop a capital markets union (CMU) reinforces the need to strengthen macroprudential policy at the European level. [...]

It is important to duly recognise the establishment of the banking union and the related changes in the institutional set-up in the regulatory framework for macroprudential policy. [...]

Legislative changes should, inter alia, include the revision of the respective powers of national and EU-level macroprudential authorities so as to better delineate responsibilities in the areas of risk assessment and policy making, including the coordination and notification procedures between authorities. [...]

Powers on the identification of systemically important institutions (SIIs) need to be clearly assigned also to the ECB in addition to national macroprudential authorities. [...]

Relationship between macro- and microprudential authorities

The review should clarify the roles of macro- and microprudential authorities in the regulatory framework by clearly aligning responsibilities and powers over the available tools, under the condition that both have a sufficient and effective toolkit to deliver on their objectives.  [...]

While a clearer allocation of tools is necessary, this should not lead to gaps in the framework where authorities would not have sufficient tools to deliver on their mandate and policy objectives. [...]

Macroprudential toolkit The review provides the opportunity to create a single macroprudential toolkit in the hands of macroprudential authorities to address systemic risk stemming from the banking sector. [...]

The review should ensure that macroprudential authorities, including the ECB in its macroprudential supervisory function, have the tools they need to effectively address the various emerging risks. [...]

The review should furthermore ensure that the policy objectives of the various elements of the capital buffer framework are clarified and the current overlaps between instruments are eliminated. [...]

Furthermore, the ECB is of the view that the cap on the O-SII buffer should be raised to a level that is commensurate with the associated systemic risk. [...]

The ECB also sees the need to complete the framework for the relevant EU and national authorities with tools to address risks arising from the continuously growing non-bank sector. [...]

The ECB sees merit in having a regular review of the macroprudential framework provided for in a review clause, in both the CRR and the CRD. This review should be carried out at least every three years. [...]

Full remarks

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