European system of financial supervision

In order to establish a unique set of coherent rules for the European financial sector and therefore, reinforce the supervision of the EU financial system as a whole (so-called “macro-prudential” supervision), a European System of Financial Supervision was established end-2010. This system includes, first of all, three European supervisory authorities endowed with legal personality. These authorities are responsible for the supervision pertaining to the banking sector (European Banking Authority (EBA)), the insurance sector (European Insurance and Occupational Pensions Authority (EIOPA)) and the markets (European Securities and Markets Authority (ESMA)). These authorities interact with the existing national supervisory authorities to foster a common working culture and consistent practices regarding financial regulation. The BCL carefully follows the work of these authorities and participates in some of their working groups.

In addition, in order to ensure the macro-prudential supervision of the EU financial system, a European Systemic Risk Board was also set up within the European System of Financial Supervision. This independent body, which is chaired by the President of the ECB, notably comprises the governors of the central banks of the European Union, who are all voting members. Its aim is to prevent or mitigate systemic risks by monitoring and analysing the risks threatening financial stability, by issuing early warnings in case of an intensification of systemic risks, and if needs be, by formulating recommendations regarding the measures to be taken to alleviate those risks.