Transcript The ESRB template

The ESRB and its ASC
Daniel Gros
CEPS Director and ASC Member
Brussels, 18 November 2014,
Economic and Social Committee
What is the ESRB ?
• Board responsible for macro-prudential
oversight of EU financial system
• Key objective: to prevent and mitigate systemic
risk and ensure a sustainable contribution of the
financial sector to economic growth
• => FORWARD LOOKING!
• Soft power: Warnings and recommendations
(“act or explain”)
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ESRB public recommendations
21 September 2011: FX lending risks
22 December 2011: US$ funding risk
22 December 2011: Macro-prudential mandates
20 December 2012: Money market funds (CNAV vs VNAV)
20 December 2012: Bank funding risk; asset encumbrance
4 April 2013: List of macro-prudential instruments
30 June 2014: CCB guidance
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Recently legislated tasks for the ESRB
• Capital Requirements Directive (CRD):
– Art. 133: recommendation on systemic risk buffer
– Art. 135 and 138: guidance on counter-cyclical buffer
• Capital Requirements Regulation (CRR):
– Art. 458: opinion on national macro-prudential measures
– Art. 513: advice to EC for review of macro-prudential rules
• Alternative Investment Fund Managers Directive
(AIFMD):
– advice to ESMA in limiting leverage by individual funds
– access to individual data
• European Market Infrastructure Regulation (EMIR):
– access to individual data from trade repositories
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Composition of the General Board
1st Vice-Chair
M. Carney (elected)
Chair
ECB President
2nd Vice-Chair
EBA/ESMA/EIOPA
EFC President
3 ESAs Chairs
ATC Chair
(S. Ingves; elected)
Nat. supervisory
authorities highlevel representative
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ASC Chair and
2 Vice-Chairs
(M. Pagano, M. Hellwig,
and A. Sapir)
Sub-structures
ESCB Governors
Min.
Finance
Supervisors and
regulators
European
Commission
Member
Regulator
Central banks
ECB President and
Vice-President
ESRB sub-committees
General Board
(Decision-making body)
Steering Committee
(14 General Board members)
(prepares the meetings of the General Board)
Advisory Technical Committee
(ECB, NCBs, national supervisory authority, 3 ESAs, EC, EFC, ASC)
(advice and assistance on issues relevant to the work of the ESRB NOT INDIPENDENT)
Advisory Scientific Committee
(15 high-level experts with scientific skills and experience)
(advice and assistance on issues relevant to the work of the ESRB)
INDIPENDENT
Secretariat
(ensured by the ECB)
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Who currently sits on the ASC?
Mostly academic ecnomists
Viral Acharya
Leszek Balcerowicz
Arnoud Boot
Markus K. Brunnermeier
Dario Focarelli
Alberto Giovannini
Daniel Gros
Martin Hellwig
Ross Levine
Marco Pagano
Richard Portes
André Sapir
Dirk Schoenmaker
Charles Wyplosz
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What is the utility of the ASC?
• Independent: no country bias; not subject to
lobbies
• Expert: by regulation, ASC members are chosen
for their financial expertise
• A broad church: the ASC comprises experts
from academia, industry and civil society,
knowledgeable in banking, markets, insurance,
politics...
• Nimble: at 15 members, the size of the ASC is
“just right” (not too big or small)
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What has the ASC done since 2011?
• 15 meetings
• Co-chaired 4 expert groups (on CDS, sovereign
exposures, shadow banking and
interconnectedness)
• Many interventions at General Board meetings
• 5 ASC Reports
1.
2.
3.
4.
5.
Forbearance (July 2012)
Banking union (October 2012)
SSM and macroprudential policy (September 2013)
Is Europe overbanked? (June 2014)
Macroprudential power allocation (November 2014)
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A taste of ASC influence:
Is Europe Overbanked?
• Finds that EU banking became larger, more
levered and more concentrated over past 20 years
• Banks in large banking systems take more risk
(individually and systemically)
• Bank-based structures are bad for growth
• Large universal banks pose more systemic risk
 135,000 downloads from ESRB website and cited
publicly by Draghi, Nouy, Constâncio and Liikanen
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Another test of ASC influence:
Forthcoming report on regulatory
treatment of sovereign exporsure (of
banks)
• Well known that that banks in Europe hold large
proportion of government debt on their balance
sheet, mostly of their own government.
• Key issue: should (national) sovereign bonds be
treated as risk free – especially in the euro area?
• Politically sensitive and economically important.
 Announced publicly by Draghi in EP
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What next for the ASC?
• A flavour of future challenges:
– Identify the “next crisis”
– Come to grips with data access challenges
– Design macro-prudential policy for non-banks
– Advise on bank-based macro-prudential policy within a
complex framework (national, SSM, EU)
– Assess cross-border spill-overs of national macroprudential policies
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