European Systemic Risk Board

KEY POINTS

Mandate, objectives and tasks

The ESRB is based in Frankfurt am Main (Germany). It is responsible for monitoring and analysing risk in the financial system as a whole (also known as macro-prudential oversight). To achieve this, the ESRB in particular:

• identifies systemic risks and classifies them according to their priority;
• issues warnings where systemic risks are deemed to be significant and makes them public if necessary;
• recommends remedial action in response to risks identified;
• can transmit a confidential warning and assessment to the Council of the European Union when it considers that an emergency situation is likely to occur;
• monitors the measures taken in response to warnings and recommendations;
• coordinates with international financial organisations like the International Monetary Fund and the Financial Stability Board.

The amendments introduced by Regulation (EU) 2025/2088 facilitate information sharing between the ESRB and other authorities overseeing the financial system. Improved information sharing ensures that data is reported only once and then reused. Additionally, it gives the ESRB the possibility to share data for research and innovation purposes, subject to certain conditions.

Organisation and governance

The ESRB has the following structure:

• a General Board that ensures the performance of tasks by taking the necessary decisions, chaired by the President of the ECB;
• a Steering Committee that assists in the decision-making process;
• a Secretariat responsible for day-to-day business and providing support;
• an Advisory Scientific Committee and an Advisory Technical Committee to provide advice and assistance.

The ESRB’s chair represents it externally; it also has two vice-chairs. The ECB provides the ESRB with analytical, statistical, logistical and administrative support by running its Secretariat.

The Supervisory Board of the ECB and the Single Resolution Board each send a representative to the General Board (with no voting rights). To avoid political interference, no member of the General Board may hold governmental office in a Member State.

Warnings and recommendations

In the event of significant systemic risks to its objective, the ESRB provides warnings and, where appropriate, issues recommendations for remedial action, including legislative initiatives.

These warnings or recommendations are addressed in particular to:

• the EU as a whole;
• one or more Member States;
• the ECB for the banking macro-prudential supervision tasks conferred upon it;
• one or more European supervisory authorities;
• one or more national supervisory authorities;
• one or more national authorities designated for the application of measures aimed at addressing systemic or macro-prudential risk;
• the European Commission in respect of relevant EU legislation;
• resolution authorities designated by Member States; or
• the Single Resolution Board.

ESRB recommendations

Addressees of ESRB recommendations must comply or provide an explanation for any inaction. If the ESRB decides that its recommendation has not been followed or that addressees have not provided adequate justification for their inaction, it confidentially informs the addressees, the European Parliament, the Council and the relevant European supervisory authorities.

The further evolution of the European surveillance system

As the 2008 financial crisis evolved and with the worsening sovereign debt crisis in the euro area in 2010–2011, it became necessary to further integrate the euro area’s banking systems. This led to the EU’s banking union initiative.

A review of Regulation (EU) No 1092/2010’s operation took place in 2013. This ultimately resulted in the amendments introduced in Regulation (EU) 2019/2176. These adapted the ESRB’s governance to cover the operation, since 2014, of:

• a Single Supervisory Mechanism, placing the ECB as the central supervisor for euro-area banks (over 2,000 banks)(non-euro-area countries may also decide to join); and
• a Single Resolution Mechanism, the objective of which is to ensure the orderly resolution of failing banks covered by the Single Supervisory Mechanism without using taxpayers’ money.

The changes introduced by Regulation (EU) 2019/2176 also relate to the rules on reducing risks in the EU’s banking sector. These have been constantly evolving over time and include:

• the capital requirements directive (Directive 2013/36/EU – see summary) and regulation (Regulation (EU) No 575/2013 – see summary);
• the bank recovery and resolution directive (Directive 2014/59/EU – see summary);
• the single resolution mechanism regulation (as amended by Regulation (EU) 2019/877 – see summary);
• deposit guarantee schemes (Directive 2014/49/EU – see summary), which protect deposits held by individuals and companies;
• the directive on non-performing loans (Directive (EU) 2021/2167 – see summary).