The ESRB contributes to preventing or mitigating systemic risks through the use of “soft powers”. In particular, it may issue warnings or recommendations to address significant systemic risks to financial stability in the European Union. The ESRB then monitors the follow-up to its warnings or recommendations and analyses if, and to what extent, the systemic risk has been mitigated. In addition, sector-specific Union legislation requires that the ESRB be consulted and mandates the ESRB to issue opinions with regard to certain matters of financial stability or macroprudential policy.
The ESRB also supports the development of effective frameworks for conducting macroprudential policy, both at the level of individual Member States and of the EU overall. This includes guidance on how to apply macroprudential instruments used to address specific and general systemic risks as provided for in Union or national legislation and promoting strategies to address financial stability risks, including those outside the banking sector.
The ESRB has prepared a set of documents to help make the macroprudential policy framework operational.
The ESRB issues warnings when significant systemic risks are identified and when necessary to flag such risks.
The ESRB issues recommendations for remedial action when significant systemic risks are identified and when action is necessary to address these risks.
The European supervisory authorities and the ESRB use stress tests to assess the resilience of financial institutions and market participants. As part of this cooperation, the ESRB has designed scenarios of adverse economic and financial market developments.
The ESRB contributes to the assessment of the appropriateness of certain macroprudential policy measures before their adoption by EU Member States or the ECB.
The ESRB may be consulted or requested to provide advice from a macroprudential perspective on selected topics.
The ESRB conducts surveys to seek the views of interested citizens, market participants and other stakeholders.