The BCL mandate in financial stability
The BCL's mandate regarding financial stability is fixed in national legislation as well as in the European Treaty in virtue of its participation in the Eurosystem.
- National level: following article 2 (6) of its organic law , “[…] the Central Bank shall cooperate with the Government and with prudential supervision authorities at national level, as well as with the other central banks at Community and international level, to contribute to ensuring financial stability, notably within committees set up for this purpose”.
- European level: article 127 (5) of the Treaty on the Functioning of the European Union (TFEU) entrusts the Eurosystem, besides its central duties, with the mission to contribute “to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system”.
Moreover, given the systemic importance of payment and securities settlement systems, the Banque centrale du Luxembourg is directly responsible for the oversight of payment systems in which it takes part.
In this context, there exists a direct link between the mandates of the BCL in financial stability, liquidity supervision and oversight of payment and settlement infrastructures.