Speech - Papademos: the ECB is prepared to support the ESRB.
07 September 2009
The ECB will play a key role in the new financial architecture, its success relying on the ability to give comprehensive and relevant information.
Lucas Papademos concluded his speech with a few remarks on the future of the ECB in the new financial supervisory architecture. He said:
· the ECB tasks related to its contribution to safeguarding financial stability are compatible with its monetary policy framework for achieving its primary objective of price stability. Indeed, the ECB’s monetary policy strategy is very well suited to the potential use of the interest rate instrument in order to “lean against the wind” of financial market excesses, in a manner consistent with the preservation of price stability over the medium and longer term.
· the establishment of the ESRB and the attribution of macro-prudential tasks to the ECB will strengthen the ECB’s capacity (its power and means) to contribute to financial stability, without interfering with the performance of its monetary policy tasks.
· the new body responsible for macro-prudential supervision in the EU should be independent in carrying out its tasks and pursuing its objective of assessing and regulating systemic risk. The fact that the ESRB will be responsible for the assessment of systemic risks and the formulation of pertinent policy recommendations, and that it will not be involved in the implementation of these recommendations, strengthens the argument for its policy independence.
· the effective performance of macro-prudential supervision in the EU will require addressing a number of legal, institutional and governance issues. There are two key requirements for the successful functioning of the ESRB: the first is the establishment of a comprehensive and relevant information base as well as effective information-sharing and cooperation between the ESRB and the European Supervisory Authorities. The second is that suitable and sufficient mechanisms are in place in order to ensure the implementation of the macro-prudential recommendations.
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