Report from the Commission to the European Parliament and the Council on the mission and organisation of the European Systemic Risk Board (ESRB)

The global financial crisis in 2008 revealed gaps in the regulatory and supervisory framework of the European Union. Supervision remained fragmented along national lines, was insufficiently focused on interdependence within the financial system, did not involve sufficient exchange of information and coordination between supervisors and placed little emphasis on macro-prudential oversight. Building on the recommendations of the de Larosière Report of 2009, a new authority in charge of EU-wide macro-prudential oversight was established in 2010 – the European Systemic Risk Board (ESRB), as part of the new European System of Financial Supervision (ESFS) comprising also three European sectoral micro-prudential authorities, the European Supervisory Authorities (the ESAs).

In line with Article 20 of the Regulation establishing the ESRB, this report reviews the mission and organisation of the ESRB, including issues relating to the appointment of the Chair of the ESRB, in light of experience in the past three years. Pursuant to Article 5(1) of the Regulation, the ECB President is appointed as ESRB Chair for a first term of five years following the entry into force of the Regulation i.e. 16 December 2010. For the subsequent terms, the Chair of the ESRB shall be designated in accordance with modalities to be determined. This report also responds to the reporting requirement in Article 8 of the second Regulation on the ESRB, which defines the modalities of the ECB’s support to the ESRB.

For consistency, and because the four authorities are part of the same supervisory system, the Commission has decided to conduct the review of the ESRB and of the ESAs in parallel so as to adopt and publish two review reports – one covering the ESRB and one covering the ESAs – at the same time. The purpose of this report is to assess the mission and organisation of the ESRB since its inception, in accordance with the review clauses of two ESRB Regulations. Apart from first-hand experience through its participation as a member of the ESRB General Board and other ESRB governing or advisory bodies, the Commission’s review of the ESRB was informed by various sources.

First, the Commission analysed evidence from the Public Hearing on the ESFS review on 24 May 2013. Second, the Commission assessed the feedback it received from the consultation process, which was held between 26 April and 31 July 2013. This process comprised a public consultation and a targeted consultation, including more detailed and technical questions directed at the ESAs, national authorities, relevant institutions and agencies and key stakeholders. The Commission received 137 responses in total (94 to the public consultation and 43 to the targeted consultation). Third, the Commission considered the contribution provided by the ESRB's High-Level Group on the ESRB Review as well as the ESAs Joint Opinion on the review of the ESRB. In addition, the Commission took into account other studies and reports on the matter presented by the IMF.

Finally, the study commissioned by the European Parliament (EP) on the ESRB review and the EP's resolution with recommendations to the Commission on the ESFS Review and the preceding discussions were carefully considered. Drawing on input from these various external sources – hereafter referred to simply as “stakeholders” – the Commission has proceeded with the assessment required in the relevant legislation.

• Primary Source

EUR-Lex: SDW(2014)260: Commission Staff Working Document accompanying the report http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2014:260:FIN

EUR-Lex: COM(2014)508: Follow the progress of this report through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2014:508:FIN

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