Powers of the European Systemic Risk Board


savanasquare The European Systemic Risk Board (ESRB) was established in 2011 with the task of identifying and monitoring systemic risk in financial institutions. It issues policy recommendations to mitigate such risks.

The ESRB is not merely an administrative body; it is entitled to issue recommendations for legislative initiatives addressed to: the European Union as a whole; one or more Member States; one or more of the European Supervisory Agencies, or one or more of the national supervisory authorities.

These recommendations are not binding but need to be implemented (and, firstly, be endorsed) by those authorities to whom they have been addressed. However, the addressees of such a recommendation are required to communicate to the ESRB and to the EU Council the actions undertaken in response to the recommendation and to justify any inaction on a comply or explain basis.

To date the ESRB has published recommendations touching upon a wide range of issues, namely; lending in foreign currencies; the macro-prudential mandate of national authorities; US dollar denominated funding of credit institutions; money market funds and funding of credit institutions.

Areas covered by the recommendations include: consumer protection issues; risk management; Pillar II Review; liquidity risk management in general, and liquidity and funding arrangements in particular; collateral management and its supervision; harmonisation of covered bonds legislation;    home/host issues; macro-prudential supervision; fair value measurement; public disclosures; reporting requirements.The ESRB has also issued a recommendation covering the legal liability of macro-prudential banking authorities.


Robert Priester - EBF Deputy Chief Executive & Executive Director Wholesale and Regulatory Policy.