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Article 20 of the ESRB Regulation provides that the EP and the Council shall by 17 December 2013 examine the Regulation on the basis of a report from the Commission and, after having received an opinion from the ESAs, determine whether the mission and organisation of the ESRB need to be reviewed.
In line with their establishing Regulations, the ESAs have cooperated closely and on a regular basis with the ESRB through active participation in the General Board, the Steering Committee, the Advisory Scientific Committee, the Advisory Technical Committee and various working groups. Further, the ESAs chairs have served respectively as the second Vice-Chair of the ESRB in their capacity as Chair of the Joint Committee of the three ESAs. Also the ESRB is an observer to the ESAs’ Boards of Supervisors and to the ESAs’ Joint Committee. In addition, close cooperation at staff level between the ESAs and the ESRB secretariat has been established.
The ESAs believe that the establishment of the ESRB has contributed to providing a macro-prudential oversight element to the EU framework, by its identification and assessment of the interlinkages between developments in the broader macro-economic environment and the financial system. It has served also as a mechanism for enhancing the integration and communication of macro-prudential analysis conducted by the various competent authorities at different levels across the EU.
In this context, the ESAs consider that the mandate of the ESRB is relevant and should be maintained. The non-legally binding, “act or explain” tools attributed to the ESRB have triggered significant work by competent authorities and the ESAs, addressing some key macro-prudential themes. These “act or explain” tools support an appropriate interaction between macro-prudential and micro-prudential responsibilities.
The ESAs consider that their cooperation with the ESRB, within the framework of the ESFS, has worked well. In some cases, though, the ESAs would have appreciated greater support from the ESRB in clarifying macro-prudential issues relevant for supervisory decisions. The legislation could be strengthened in this respect, by introducing an obligation for the ESRB and the ESAs to support each other in the performance of their tasks, also by providing advice at the request of the other party.
The ESAs believe that macro-prudential supervision should cover all financial sectors as well as the wider economic context. ESAs note that the ESRB General Board’s agenda has been largely driven by the financial and economic crisis, and the ESRB’s analysis of risks has focused on the banking sector. The ESRB should build on that experience and knowledge, whilst further enhancing its cross-sectoral focus to encompass the securities markets, insurance and pensions domains. Moreover, input from supervisory authorities from all sectors into the ESRB decision making processes should be further enhanced.
The ESAs consider that the current institutional arrangements and setting of the ESFS should be retained, and that radical changes are not warranted. Both the micro and the macro-prudential pillars of the supervisory architecture should continue to operate separately and in close interaction, with each component providing its own perspective in the systemic risk identification, monitoring and assessment. Retaining both the top-down and bottom-up approach is crucial in ensuring a comprehensive assessment of financial stability issues in the EU.
Finally, according to the Regulation the ESRB shall be chaired by the President of the ECB for a term of five years following the entry into force of the Regulation. For the subsequent terms, the Chair of the ESRB shall be designated in accordance with the modalities determined on the basis of the review provided for in Article 20 of the Regulation. As set out in the ESRB’s High Level Group on the ESRB review the ESAs believe that the recent changes in the micro- and macro-prudential supervision environment should be considered in this debate.