Macroprudential oversight in the EU

The European Systemic Risk Board (ESRB) was established in 2010 as a body responsible for the macro-prudential supervision of the financial system in the EU.

The objective of the ESRB’s work is the prevention and mitigation of systemic risks to financial stability in the EU. The tasks of the ESRB include defining risks on the basis of which it may issue recommendations for corrective measures.

The ESRB has issued ten recommendations. The sole addressee of one recommendation is the European Commission, while the addressees of other recommendations are the National Supervisory Authorities and other EU bodies. The implementation of four recommendations has been completed, while implementation of the measures from three recommendations is in progress. ESRB recommendations comprise several sub-recommendations that typically have their own reporting and implementation deadlines. The ESRB has issued assessments regarding compliance with implemented recommendations, which are presented herein below with an overall assessment and separate grades for individual sub-recommendations.

Review of recommendations issued by the ESRB

 

Explanation of grades issued by the ESRB

Positive grades

Mid-gradesNegative grades
Fully compliant (FC) – Actions taken fully implement the recommendation Materially non-compliant (MNC) – Actions taken only implement a very small part of the recommendation
Largely compliant (LC) – Actions taken implement almost all of the recommendationPartially compliant (PC) – Actions taken only implement part of the recommendationNon-compliant (NC) – Actions taken are not in line with the nature of the recommendation
Inaction sufficiently explained (SE) – No actions were taken but the addressee provided sufficient justification Inaction insufficiently explained (IE) – No actions were taken and the addressee did not provide sufficient justification 

Source: ESRB