The ESRB issues recommendations for remedial action when significant systemic risks are identified and when action is necessary to address these risks.
Recommendations can be addressed to the EU as a whole or to Member States, the European Commission, the European supervisory authorities or national authorities. The ESRB decides, on a case-by-case basis, whether a recommendation should be made public, bearing in mind that disclosure can help to foster compliance.
The ESRB will then monitor if, and to what extent, the systemic risk is addressed. It also monitors compliance with its recommendations via an “act or explain” mechanism. Further details are available in the Handbook on the assessment of compliance with ESRB recommendations.
This recommendation aims to close remaining data gaps by establishing a more harmonised framework for monitoring developments in real estate markets in the EU. The recommendation provides a common set of indicators that national macroprudential authorities are recommended to monitor when assessing risks originating from the real estate sector, along with working definitions of those indicators.
This recommendation provides guidance for a systematic assessment of the cross-border effects of macroprudential policy and a coordinated policy response in the form of voluntary reciprocity for macroprudential policy measures when needed. The arrangement for voluntary reciprocity aims to address cross-border effects of national macroprudential policy measures, which may have negative effects on the financial stability of the Union. The Recommendation is subject to amendments for the inclusion of macroprudential policy measures, the reciprocation of which has been requested by the relevant activating authority and subsequently recommended by the ESRB.
Amendment – Belgium
Recommendation of the European Systemic Risk Board of 24 March 2016 amending Recommendation ESRB/2015/2 on the assessment of cross-border effects of and voluntary reciprocity for macroprudential policy measures
Amendment – Estonia
Recommendation of the European Systemic Risk Board of 24 June 2016 amending Recommendation ESRB/2015/2 on the assessment of cross-border effects of and voluntary reciprocity for macroprudential policy measures
(Recommendation ESRB/2016/4)ENGLISHOTHER LANGUAGES (22) +
This recommendation aims to promote a coherent approach across the Union for recognising and setting countercyclical buffer (CCB) rates for exposures to third countries in order to prevent an uneven playing field and the resulting incentives for regulatory arbitrage. The Recommendation is intended to ensure that designated authorities recognise CCB rates set by third-country authorities, set CCB rates for exposures to third countries and set lower CCB rates when risks in a particular third country abate or materialise.
Decision on the assessment of materiality of third countries for the Union’s banking system in relation to the recognition and setting of countercyclical buffer rates.
This recommendation provides guidance to Member States on setting countercyclical buffer (CCB) rates with the aim of establishing a common approach across the Union. The Recommendation provides designated authorities with principles for assessing and setting CCB rates, and guidance on measuring and calculating the credit-to-GDP gap and on calculating the buffer itself.
This recommendation sets out the intermediate objectives of macroprudential policy and provides an indicative list of instruments that Member States may assign to relevant authorities to pursue both the ultimate objective and the intermediate objectives of macroprudential policy. It recommends that an overall policy strategy be defined that links the ultimate and intermediate objectives with the application of macroprudential instruments as well as their periodic evaluation. This Recommendation follows up on Recommendation ESRB/2011/3.
This recommendation provides guidance to supervisory authorities and the European Banking Authority (EBA) on incentivising sustainable funding structures for credit institutions and mitigating any related systemic risks. The Recommendation requires supervisory and macroprudential authorities to establish a monitoring framework for funding risks and asset encumbrance. It also recommends greater transparency about encumbered assets in the public reporting of banking institutions. Supervisory authorities are requested to identify best practices regarding covered bonds and encourage harmonisation of their national frameworks, while the EBA is recommended to assess whether financial instruments other than covered bonds could also generate encumbrance.
Recommendation of the European Systemic Risk Board of 21 March 2016 amending Recommendation ESRB/2012/2 on funding of credit institutions.
Decision of the European Systemic Risk Board of 16 September 2014 on the extension of certain deadlines set by Recommendation ESRB/2012/2 on funding of credit institutions.
(Decision ESRB/2014/4)ENGLISHAnnexOTHER LANGUAGES (22) +
This recommendation aims to reduce the systemic risks arising from money market funds (MMFs). The European Commission is recommended to ensure, through Union legislation, the change of the constant net asset value to a fluctuating net asset value model, the introduction of stricter liquidity requirements, the public disclosure of specific information by MMFs and the adoption of enhanced reporting obligations to supervisory authorities for MMFs.
This recommendation aims to create effective macroprudential policy in the EU. Member States are recommended to designate a single institution or board that is responsible for the conduct of macroprudential policy at the national level and that has control over the instruments appropriate for achieving its objective. Furthermore, the ESRB recommends that the macroprudential authority should be operationally independent and accountable to the national parliament.
Follow-up Report – Overall assessment
Decision of the European Systemic Risk Board of 18 June 2014 on the extension of the deadline included in Recommendation ESRB/2011/3 of 22 December 2011 on the macro-prudential mandate of national authorities.
This recommendation aims to prevent European banks being dependent on US dollar funding. National supervisory authorities are recommended to take preventive measures by monitoring maturity mismatches between assets and liabilities in US dollars and ensuring that banks have contingency plans in place for their US dollar funding.
Follow-up Report – Overall assessment
This recommendation aims to reduce the risks associated with financial institutions lending to households and companies in foreign currency. National supervisory authorities and Member States are recommended to require financial institutions to provide borrowers with adequate information on the risks associated with borrowing in foreign currency. National supervisory authorities are further recommended to monitor whether foreign currency lending is encouraging excessive credit growth and to ensure that financial institutions incorporate the risks associated with lending in foreign currency into their internal risk management.
The Recommendation had to be implemented by end 2012. It aims at preventing potential systemic risks arising from excessive lending in foreign currency, a practice which in the past created fragilities in some parts of Europe. This includes mitigating possible negative spillover effects across the EU.
To this aim, relevant measures by national authorities must be applied in a consistent manner.
Follow-up Report – Overall assessment
Follow-up Report – Overall assessment with regard to the EBA and Croatia