European Systemic Risk Board

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The European Systemic Risk Board (ESRB) was established in 2010 as part of the European System of Financial Supervision (ESFS). The Chair of the ESRB is Jean-Claude Trichet, President of the European Central Bank (ECB). The first Vice-Chair of the ESRB is Mervyn King, Governor of the Bank of England.

Contents

Background

In response to the financial crisis of 2008, a working group commissioned by the European Commission, chaired by Jacques de Larosiere, recommended that a Union-level body be established with a mandate to oversee risk in the financial system as a whole. On December 16, 2010, the legislation establishing the European Systemic Risk Board (ESRB) passed. [1]

ESRB Tasks and Objectives

The objective of the ESRB is macro-prudential oversight of the European Union financial system and "prevention or mitigation of systemic risks to financial stability in the Union." [2] To this end, the ESRB is responsible for the following tasks:

  • determining and/or collecting and analysing all the relevant and necessary information;
  • identifying and prioritising systemic risks;
  • issuing warnings where such systemic risks are deemed to be significant and, where appropriate, make those warnings public;
  • issuing recommendations for remedial action in response to the risks identified and, where appropriate, making those recommendations public;
  • when the ESRB determines that an emergency situation may arise issuing a confidential warning addressed to the Council and providing the Council with an assessment of the situation, in order to enable the Council to adopt a decision addressed to the European Supervisory Authorities (ESAs) determining the existence of an emergency situation;
  • monitoring the follow-up to warnings and recommendations;
  • cooperating closely with all the other parties to the European System of Financial Supervision (ESFS); where appropriate, providing the ESAs with the information on systemic risks required for the performance of their tasks; and, in particular, in collaboration with the ESAs, developing a common set of quantitative and qualitative indicators (risk dashboard) to identify and measure systemic risk;
  • participating, where appropriate, in the Joint Committee of the ESAs;
  • coordinating its actions with those of international financial organisations, particularly the International Monetary Fund (IMF) and the Financial Stability Board (FSB) as well as the relevant bodies in third countries on matters related to macro-prudential oversight;
  • carrying out other related tasks as specified in Union legislation.

Related Documents: Regulation (EU) No 1096/2010 - ECRB Tasks and Functions; Larosiere Report, 2009

References

  1. Establishment of the ESRB. European Systemic Risk Board. Retrieved on August 24, 2011.
  2. ESRB Mission, Objectives and Tasks. European Systemic Risk Board. Retrieved on August 24, 2011.

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