Presentation is loading. Please wait.

Presentation is loading. Please wait.

Outline 1. The reform of EU supervision: drivers,objectives,architecture 2. European Systemic Risk Board (ESRB); first experience 3. European Supervisory.

Similar presentations

Presentation on theme: "Outline 1. The reform of EU supervision: drivers,objectives,architecture 2. European Systemic Risk Board (ESRB); first experience 3. European Supervisory."— Presentation transcript:

1 The new European financial architecture Silvia Vori – Banca d’Italia May 2012 DO NOT QUOTE

2 Outline 1. The reform of EU supervision: drivers,objectives,architecture 2. European Systemic Risk Board (ESRB); first experience 3. European Supervisory Authorities (ESAs) 4. EBA and the Colleges of Supervisors 5. EBA recapitalization package 6. The EU framework for crisis resolution Conclusions

3 The reform of EU supervision: drivers, objectives, architecture

4 The drivers of the reform
Many deficiencies of EU supervision highlighted by the crisis: in the rules Disconnect between cross-border activites and national jurisdiction In many areas common rules declined in different ways Room for regulatory arbitrage Competition in laxity and national champions in supervision Absence of a macro-prudential oversight framework Different supervisory evaluation models and methods Inadequate home-host coordination within supervisory colleges Difficulties in coordinating actions at time of crisis

5 The objectives of the reform
The main answers given by the reform: Establishment of a body in charge of macro-prudential oversight Strengthening of the micro-prudential supervisory framework: 3 new EU Authorities with the following tasks: - improve convergence of rules and practices (Single Rulebook) strengthen cooperation in supervision of cross-border institutions contribute to the financial system’s risk assessment (i.e. stress tests) perform some supervisory functions at a centralized level (CRA) Work ongoing on a European framework for crisis management

6 The main steps of the reform
February 2009 De Larosière Report (DLR): proposals for reforming EU supervision March, May and June 2009 European Commission Communications: DLR implemented, action plan ECOFIN and EU Councils confirm Commission’s proposals September 2009 Commission’s legislative proposals for ESRB and ESAs October and December 2009 ECOFIN – common position on ESRB and ESA regulations September - October 2010 EU Parliament approves in plenary the set of rules, formally adopted by the Council at its subsequent meeting January 2011 All new structures operative

7 The new EU financial architecture
E S F S ESRB EBA II ESMA III EIOPA IV Joint Committee V National Authorities VI individual institutions microprudential supervision macro prudential supervision banks securities markets Insurance, pension funds cross sector I

8 2. European Systemic Risk Board (ESRB): first experience

9 ESRB - mission, objectives, tasks
ESRB Regulation (No. 1092/2010 of 24 November 2010): Mission: responsible for macro-prudential supervision of EU financial system Objectives: prevention/mitigation of systemic risk Tasks: collects and analyzes all relevant information identifies and prioritizes systemic risks issues risk warnings and recommendations for corrective actions monitors the follow-up to recommendations solicit the Council to issue declaration of emergency situation co-operates with ESAs on assessment of risk to financial stability

10 Relations ESRB-ESAs Collection and exchange of informations
The ESRB may request aggregate or summary data to the ESAs, to the ESCB, to the Commission, to national authorities, and, upon reasoned request, data on individual institutions Assessment of risks to financial stability Integrating the macroprudential analysis conducted by the ESRB with bottom-up risk assessments from the ESAs (ex. Risk Dashboards) Conduct of stress tests at the European level Collaboration between ESRB and EBA (early experience: stress tests conducted in July 2011 by EBA in collaboration with ECB, ESRB,Com)

11 ESRB organization General Board: decision-making body; decides by simple majority of voting members; quorum of 2/3; exceptions to this rule in some cases (see below) Steering Committee: support to the General Board; 14 member body prepares GB meetings, reviews documents, monitors progress in the ESRB work Secretariat (provided by the ECB): provides analytical, statistical, administrative and logistical support Advisory Technical Committee: replicates GB composizion; provides advice and assistance on technical matters relevant to the ESRB work, at the ESRB Chair’s request Advisory Scientific Committee: advisory body composed of 15 representatives of academia and trade associations (industry, PMI, consumers)

12 Decision making body: the General Board
Chair: ECB Chair (to be reviewed after 5 yrs) 2 Vice-Presidents (1 elected) Members with voting rights: ECB Vice-President and 27 Governors of EU national central banks; A Commission representative; The Chairs of the 3 European Supervisory Authorities (ESAs); The Chair of the Advisory Technical Committee; The Chair and the 2 Vice-Presidents of the Advisory Scientific Committee Members without voting rights: 1 representative per Member State of national supervisory authorities; The Chair of the Economic and Financial Committee.

13 Risk warnings and recommendations
May be general or specific (never individual institutions) May be addressed: to the EU as a whole, to the Commission (on legislative issues), to one or more Member States, to the ESAs, to one or more national supervisory authorities and, in this last case, also to the respective Member States Shall be forwarded to the Council, the Commission and when addressed to a national supervisory authority also to the ESAs 2/3 majority required for adopting a recommendation and to make a risk warning or a recommendation public

14 Follow-up to recommendations
Recommendations addressees are required to communicate to the ESRB, which shall inform the Council, the actions undertaken in response to the recommendations The ESRB decides on a case-by-case basis when to disclose the risk warnings or recommendations and in such cases it informs the addressees and the Council in advance Adequate justifications must be provided for inaction (“comply or explain”) If follow-up is insufficient, the ESRB signals to the addressees, the Council and, where relevant, the responsible ESA

15 The process of macro-prudential analysis

16 Outline and main questions
What is systemic risk and where does it come from? What approaches can be used to identify and to assess systemic risk? How can financial instability be addressed? Which instruments can be used to achieve macroprudential policy goals?

17 Systemic risk “Risk that financial instability becomes so widespread that it impairs the functioning of a financial system to the point where economic growth and welfare suffer materially” (ECB definition) “Horizontal or cross-sectoral dimension”: Failures of banks or severe malfunctioning of key markets “Vertical or time-series dimension”: Endogenous build-up and unravelling of imbalances “Size matters” (SIFIs)

18 Approaches for risk identification and measurement
Financial stability indicators – measure current state of instability in the financial system Early warning signal models – identify variables that can predict financial crises Contagion and spillover models – network analyses that project what happens if one or more institutions fail Macro stress-testing – assess the resilience of the financial system to extreme but plausable aggregate shocks

19 How to address financial instability
Useful Policies: Macroprudential policies (Countercyclical capital buffers) Taxation (tax regime for capital or debt, bank levy) Corporate governance (remuneration, dividend policies) Microprudential supervision (solvency ratio, leverage) Monetary policy (interest rates decisions) Lending of last resort (for liquidity problems) Fiscal support (interaction sovereign debt risk/bank risk)

20 Objectives of macroprudential policy
Defining a framework for macroprudential policy similarly to monetary policy framework, start with identifying intermediate policy objectives (related to market failures): Strengthen resilience to excessive credit and leverage Address maturity mismatches/liquidity and funding risk Limit exposure concentration Address expectation of bail outs Strengthen resilience of infrastructures

21 Instruments for macro-prudential policy objectives - 1
Link the instruments to each intermediate objective – define a possible taxonomy of macro-prudential instruments: Mitigate/prevent excessive credit growth and leverage- instruments: - Countercyclical capital buffers - Instruments that directly affect the credit cycle i.e. limits on Loan-to-Value (LTV) ratios or increased risk-weights on certain sectoral exposures Measures taken to face risks related to F/X currency loans (higher risk-weights, higher provision rates,restrictions on F/X loans) Mitigate/prevent maturity mismatches – instruments: - Weighted liquidity ratio (LCR) - Unweighted liquidity ratio (loan-to-deposit ratio) - Restriction on funding sources – NSFR

22 Instruments for macro-prudential policy objectives - 2
Limit direct/indirect exposure concentrations- instruments: - Large exposure restrictions - CCP clearing requirements Limiting expectations of bail-outs – instruments: - SIFI capital surcharge Recovery and resolution plans/regime Strengthening financial infrastructures – instruments: - Deposit insurance schemes - Margins/haircut requirements for CCP clearing

23 Instruments - possible application in practice
Example: Overheated housing markets Act on mortgage supply: raise capital charges on loans with relatively high loan-to-value (LTV) ratios Act on mortgage demand: reduce limits on LTV and loan-to-income (LTI) ratios (in booms) to reflect greater risk in the underlying collateral Calibration issues (see Bank of England 2009, 2011) - Transmission channels (state of the cycle, offsets) Effectiveness (perfectly competitive market, demand side measures may be more effective) Efficiency of competing instruments

24 Some challenges of macroprudential policy
Need a better understanding of the transmission channels of the different instruments Choice of the most appropriate instrument likely to depend on country- specific factors (structure of the financial system) Scope for overlaps among instruments,risk of overregulation Reflection on risks of unintended consequences Need for coordination in the implementation of instruments (minimize cross-border spillovers/sectoral arbitrage) Frequent policy adjustments may cause uncertainty in the financial system

25 First experiences with the new M-P framework - 1
ESRB actions in 2011 in respect of the task of identifying and assessing systemic risks for the EU area (warnings, hearings): Call for a fully credible EBA stress test on EU banks (April 2011) and ask Member States to provide adequate backstops Call upon EU governments to promptly implement measures approved in July to restore financial credibility and address sovereign risk/banking risk feedback loop (September 2011) Call upon EU authorities to ensure that EBA package for banks’ recapitalization would not exacerbate risk of economic recession (Dec. 2011) Call upon EU governments not to postpone fiscal/structural reforms, upon banks to strengthen their resilience (Mar.2012)

26 First experiences with the new M-P framework - 2
3 ESRB recommendations (published in EU Official Journal): To address risks of excessive F/X currency lending (Sept. 2011) – need better information and monitoring, increased capital charges, limits on related funding To avoid future tensions in US dollar funding market (Dec. 2011) – need more information and increased monitoring of banks’ contingency plans on funding To establish national macroprudential mandates (Dec. 2011) – set of guiding principles to aid the development of macroprudential authorities at national level (stress in particular leading role of central banks in m-p policy)

27 Some critical aspects concerning the ESRB
Is the ESRB too bureaucratic? Will it be able to “bite”? Macroprudential policy framework still in its infancy, needs to be further developed. Macroprudential policy seems effective in preventing systemic risk, less so in a fully blown crisis What is the link between macroprudential oversight and macroeconomic surveillance (EIP)? How will macro-microprudential policies interact? Risk of conflicts, both at national level and cross-border More?

28 3. European Supervisory Authorities (ESAs)

29 ESAs - Objectives Three new ESAs (EBA, ESMA, EIOPA) are established with the following objectives: Set up the single rule book for the EU financial market Promote and enhance quality and consistency of supervision Reinforce oversight of cross-border groups Early warning of upcoming vulnerabilities Effective early intervention and bank resolution

30 ESAs - Tasks Develop binding technical standards, guidelines, recommendations Promote common supervisory culture / supervisory practices Perform peer group analyses and peer reviews Co-ordinate national authorities’ response in emergency situations Promote consistent operating modalities of supervisory colleges Contribute to financial system risk assessment in cooperation with the ESRB (development of risk dashboards, stress tests) Monitor innovative financial products and activities Contribute to the development of procedures for crisis management and of the European network of deposit guarantee schemes

31 Binding technical standards
The Authority shall draw up proposals for technical standards Regulatory or implementing standards (do not imply policy decisions) in specific areas identified by the European legislation The proposals are adopted by the Commission with Regulation or Decision (directly applicable without need for transposition) The proposals are preceded by: Public consultation Impact Analysis Opinion of the Banking Stakeholders Group The Commission – when required by the EU's interest - may Reject the standards proposed by the Authority Make changes or partially approve the standards

32 Breach of European law In case of non-compliance by national authorities with EU financial legislation and rules, the ESA may: Inquiry into the suspected violation Recommend to put an end to the violation (within 2 months) Request action plan of the national authority (within 10 workdays) If infringement not ceased within one month, the ESA may ask the Commission to issue a formal opinion The national authority shall inform within 10 workdays the Commission and the ESA of action to implement the opinion If the national authority does not comply and integrity and competitiveness of the system is at stake, the Authority can take decisions towards individual financial institutions

33 Action in emergency situations
The ESA shall facilitate and coordinate the action of national authorities in emergency situations Determination of the emergency situation: Decision taken by the Council, at the request of one of the ESAs, the Commission or the ESRB and in agreement with the ESRB, the Commission, the ESAs. The Council periodically reviews the decision The Authority may take decisions binding national authorities to take the necessary steps to overcome the emergency If national authorities do not comply with these decisions, the ESA may adopt measures towards individual financial institutions

34 Binding mediation The ESA may intervene in disputes between national authorities on cross border issues in the cases established by the European legislation If the ESA conciliation fails, the ESA can take a decision which has binding effects on the parties of the dispute If national authorities do not comply with the ESA decision, the ESA can take action towards individual institutions

35 Safeguard clause The ESA decisions concerning
emergency situations and binding mediation should not have direct consequences for the "fiscal responsibility“ of the Member States The Member State may appeal the decision of the ESA The appeal suspends the decision of the ESA The Council decides whether to confirm or revoke the decision of the ESA

36 Systemic institutions and crisis management
The ESA are responsible for developing, in collaboration with the ESRB, a common set of qualitative and quantitative indicators for the identification and measurement of systemic risk The ESA will also develop methodologies to identify systemic institutions that should be subject to a more intense supervision and when appropriate to proper procedures for recovery and resolution Crisis management The ESA contribute to the development of resolution tools, including funding mechanisms, deposit guarantee schemes and contributions from the private sector (financial levies) In these areas the ESA may develop technical standards

37 Information collection
The ESA collect the information needed for their tasks Information is provided by the national authorities To avoid overburden national authorities, the ESA take into account data already collected by the European Statistical System (ESS) and the ESCB If data are not available from national authorities: the ESA may make a reasoned request to other national authorities, NCBs and national statistical offices and as a last resort, to financial institutions

38 Decision-making body – Board of Supervisors
Composition The heads of national supervisory authorities (with voting rights) Without voting rights: The Chairperson a Commission representative an ECB representative an ESRB representative one representative for each other ESA Tasks Takes decisions Approves the work program, the annual report, the budget and the financial statement Decision-making rules Simple majority-vote (as a rule) Qualified majority with the weights set by the Treaty for the adoption of binding technical standards Binding mediation: the Panel's proposal is approved by a simple majority unless it is rejected by a block minority

39 Joint Committee of European Supervisory Authorities -
Permanent Forum of cooperation between the ESAs on cross-sector issues, including the application of the Directive on Financial Conglomerates Composed of: Chairpersons of the ESAs, who alternate as Chair (rotating annually) Chairman of the Sub-Committee on Conglomerates The Executive Directors of the ESAs, a representative of the Commission and a representative of the ESRB attend the meetings On cross-sector issues (including binding mediation) the ESAs shall reach a common position through the Joint Committee and adopt the acts of respective competence in parallel

40 4. EBA and the Colleges of Supervisors

41 Colleges of supervisors in European legislation
EU Law requires the establishment of colleges of supervisors for cross-border groups with at least one significant branch or two subsidiaries in another Member State There are more than 100 cross-border groups established in an EEA country; of these, 44 have consolidated assets of more than € 30 billion at end-2009 and at least two subsidiaries and / or significant branches in another Member State The average number of host supervisors per college is 10 (in larger colleges more than 20, in smaller ones 2)

42 Colleges of supervisors – the role of EBA
The EBA contributes to promote the proper functioning of colleges and consistent application of rules among colleges The EBA can: Participate in the activities of colleges, including inspections Collect and manage information in a centralized way Co-ordinate stress tests at the EU level and make recommendations to national authorities in order to face problems emerged Promote efficient risk assessment activities within colleges (in ongoing supervision and in stress situations) Ask that decisions taken in the colleges be reviewed if they breach either European standards or conflict with the objective of supervisory convergence

43 Home-host coordination in the colleges of supervisors
EU law requires the home supervisor to reach a joint decision with host supervisors on the adequacy of capital at group (consolidated) and local entity level (individual) A consolidated risk assessment report is produced by the home supervisor, taking into account host supervisors’ views The decision on capital adequacy shall be taken within 4 months from the production of the report and shall be communicated to the group The decision must be updated annually

44 Role of the EBA Binding mediation by the EBA:
In case of disagreement between home and host authorities, decisions are taken separately by the home supervisor for the parent bank (consolidated level) and by the host supervisors for individual subsidiaries (individual/solo level) Binding mediation by the EBA: - during the 4 months’ period, any of the competent authorities can refer the matter to the EBA - the authorities shall conform with the EBA decision

45 5. EBA recapitalization package

46 Background The deepening of the sovereign debt crisis since last summer has triggered a negative feedback loop: bank funding has been severely affected, with markets coming to a standstill this has triggered a significant deleveraging process, which is posing a serious threat to growth prospects the fiscal position of the sovereigns under stress risks deteriorating further Last September, the ESRB called to strengthen bank capital: transparent and consistent valuation of banks’ sovereign exposures recourse to backstop facilities

47 Main passages Since August, the EBA has put forward to the European Council technical proposals for addressing market concerns. Package presented in October: EU-wide guarantee scheme a requirement to banks to establish a temporary and exceptional capital buffer Capital measures agreed by the Council: banks are required to strengthen their capital positions: by building up an exceptional and temporary capital buffer against market value of sovereign debt exposures at end-September (stock and prices) by establishing an exceptional and temporary buffer such that the Core Tier 1 capital ratio (= Core Tier 1 capital/RWA) reaches a level of 9% by June 2012

48 Main purpose Buffers are designed to provide a reassurance to markets about the banks‘ ability to withstand a range of shocks and still maintain adequate capital: The sovereign capital buffer is a one-off measure the EBA will reassess the continued need and size of capital buffers against banks’ sovereign exposures in the light of possible improvements of sovereign risk

49 Sample banks 71 banks - Same sample as in EBA July 2011 stress test with minor exemptions (stress test sample: 90 banks representing more than 65% of EU banking assets and more than half of the banking assets in each country) In Italy 5 banks: Intesa-SanPaolo Unicredit Group Monte Paschi Siena Banche Popolari Unione di Banche Italiane

50 Capital plan Banks asked to submit plans for achieving the target capital levels to national supervisors by January 2011 Banks should first use private sources of funding retained earnings and reduced bonus payments new issuances of common equity and suitably strong contingent capital (EBA term-sheet) other liability management measures (i.e. buy-back of existing hybrid instruments not recognised as CT1) When necessary, government support measures (equity, hybrids) subject to EU COM approval

51 Anti-deleveraging measures
Planned reduction in lending activity will not be allowed for reaching the 9% CT1 ratio benchmark Reduction in the mix/stock of sovereign assets will not change the sovereign capital buffer that is a fixed amount (at end-September) Reductions may be recognised for the achievement of the 9% CT1 ratio target if sales are a transfer of contracts or business units to a third party and do not lead to reduced lending to the economy Capital plans must be shared and consulted on with the EBA and with competent authorities within colleges of supervisors to ensure that the need to maintain exposure levels of banking groups in all Member States is taken into account If necessary the EBA will use its mediation role to that effect

52 Overall shortfall and shortfall by country
The overall shortfall is EUR bln; excluding €30bln attributed to Greek banks and €7bln to other banks under major restructuring, remaining shortfall figure is €78bln

53 Capital shortfall, breakdown by bank, €bln

54 Italian banks’ capital shortfall
Unicredit Group: € 7.9 bln Intesa-SanPaolo: Monte dei Paschi: € 3.3 bln Banco Popolare: € 2.7 bln UBI Banca: € 1.4 bln

55 Contribution to the increased capital needs
The capital requirement is based on 3 drivers which on average contribute in equal proportions to the capital shortfall: the target CT1 ratio of 9% the application of Basel 2.5 (i.e. CRD3) rules for RWAs the sovereign buffer about 60% of the sovereign buffer relates to assets held in the AFS portfolio which, under the current accounting standards, are already marked-to-market and will be marked to market for regulatory purposes under Basel 3 the remaining component can be attributed to the marking-to-market of EEA sovereigns in the HTM and L&R portfolios

56 Contribution to the strengthened capital requirement

57 The relevance of the 3 drivers vary across countries
Banks from distressed sovereigns more affected by the sovereign buffer: about 70 percent Belgium and Cyprus 50 percent for Portugal and Italy Spanish banks are the most affected by the 9 percent CT1 threshold German, French and Dutch banks are the most affected by the Basel 2.5/CRD3 rules

58 Buffer after capital plans
In banks’ capital plans, methods to cover shortfall are divided into: Direct Capital Measures (€74bn, equal to 96% of shortfall) Capital Impact of RWA Measures (€23bn, 30% of shortfall) Planned measures give a Recapitalization Amount of €97bn, about €20bn above the shortfall of €78bn

59 Capital impact of RWA measures

60 RWA Impact of deleveraging

61 Planned reduction in lending

62 Deleveraging so far: US vs EU
Deleverage faster and more aggressive in the US as of the onset of the crisis: aggregate bank balance sheet down 16% from 2007 peak Deleverage metrics (source: Haver Analytics, Barclays Capital, McKinsey Global Institute)

63 EU bank deleverage from equity increase not asset decrease

64 Italian banks capital plans submitted in January
UCG completed in January a capital increase of €7.3bln and other capital measures fully satisfying the EBA requirement MPS, Banco Popolare and UBI plans envisage a range of actions: - asset disposals - capital management operations - retained earnings - validation of internal risk models - transactions involving hybrid instruments already in place BoI asked banks to adopt dividend/remuneration policies consistent with EBA targets Overall bank plans do not imply significant cutback in lending

65 Issues Deleveraging is driven by cost and availability of funding
This is more a Eurosystem’s task: exceptional measures taken by ECB, including 3yrs LTROs (on 21 Dec 2011 and 29 Feb 2012) and the expansion of the list of assets eligible as collateral in refinancing operations The EBA and national supervisors can control that the implementation of the EBA recommendation does not lead to deleveraging

66 6. The EU framework for crisis resolution

67 Need for a European crisis resolution framework
In the recent crisis national support measures and deposit guarantee schemes were used to a different degree: these measures avoided a systemic collapse but resulted in high costs for governments and competitive distortions Cross-border groups were broken down and rescued separately along national borders regardless of their integrated business model Objectives of a European framework for crisis resolution: - Preserving financial stability - Minimizing taxpayers’ burden - Protecting depositors

68 Main work on crisis resolution in EU
The revision of Deposit Guarantee Schemes Directive EU Commission Consultation on a European framework for cross-border crisis resolution in the banking sector: Consultations in October 2010 and January 2011 Legislative proposals expected in the Summer 2012 Communication from the Commission on the fund for the crisis resolution in the banking sector - May 2010 EU Commission discussion paper on the debt write-down tool – bail-in – March 2012

69 Elements of the EU framework for crisis resolution
Main elements of the resolution framework: Instruments for preventive intervention - Remedial measures (art. 53 Italian Banking Law) Instruments for crisis management and resolution - Reorganization and resolution measures (in Italy: special administration and compulsory liquidation) Mechanisms to coordinate intervention measures Financing crisis resolution

70 Instruments for preventive intervention
Objective: early intervention to prevent worsening of the bank’s difficulties Means: extending powers of supervisory authorities Minimum common toolkit - Measures that need / require the bank’s management to act - Measures towards the bank’s management - Measures towards the shareholders Conditions for activation: soft triggers vs hard triggers - Co-ordination, legal certainty but also room for discretion - Flexible “early warnings” system

71 Instruments for resolution
Objective: minimize systemic impact and related costs by identifing alternative options to bail-out or liquidation Instruments: full harmonization or minimum common set - Bail-in (contractual/statutory) - Acquisition of assets and liabilities by private subjects - Transfer of assets and liabilities to bridge bank - bad bank/good bank Conditions for activation: - before insolvency - balance between legal certainty for shareholders' rights and promptness for intervention - guarantees for creditors and counterparties

72 Mechanisms for coordination
Cross-border groups resolution – COM proposal Co-ordination of measures by home authority - takes into account the need for an integrated solution to crises Framework for capital and liquidity intra-group transfers - based on a voluntary agreement between all entities in the group, approved by all involved authorities Authorities’ power to prohibit such transfers is constrained - Linked to conditions for activating resolution measures - EBA may play a mediation role Necessary condition for the functioning of this framework is the introduction of the concept of “group interest” in legislation

73 Financing the resolution
Private sector contribution (shareholders and creditors): debt/equity conversion (contingent capital) and haircuts on unguaranteed creditors (bail-in). Controversial issue Resolution fund financed by intermediaries’ contributions Purpose: not rescue, but part of the new resolution system Harmonized network of national funds Ex ante contributions Basis for calculating contributions: assets, liabilities, profits? Separate funds or part of public budget? Burden sharing not specific formulas ex-ante, but preparation activities in Cross Border Stability Groups enabling such allocation when necessary

74 Conclusions

75 Broader overview The ESFS is a component of the new European economic governance, comprising also: Surveillance of macro-economic imbalances (EIP) Fiscal framework (fiscal compact) Coordination of economic policies (European semester, pact euro plus for competitiveness) Financial assistance (EFSF/ESM) EU framework for crisis resolution

76 Conclusions – open issues
EFSF subject to review by EU COM in 2013 – some open issues: Interaction between microprudential supervision and macroprudential oversight: possible conflicts? Impact of sovereign debt crisis on EU financial integration: signs of balkanization of the EU financial markets threatening the conduct of the single monetary policy Should we move towards a more federal approach to financial supervision? A Banking Union (for LCBGs), as a complement to Monetary Union and a further step towards fiscal union? Eurozone vs EU integration?

77 Thank you! Silvia Vori Banca d’Italia Head of Financial Stability Division Financial Stability Unit Tel

Download ppt "Outline 1. The reform of EU supervision: drivers,objectives,architecture 2. European Systemic Risk Board (ESRB); first experience 3. European Supervisory."

Similar presentations

Ads by Google