The European Systemic Risk Board (ESRB) is an independent EU body responsible for the macro-prudential oversight of the financial system within the Union. The ESRB is located in Frankfurt, Germany and its Secretariat is provided by the European Central Bank.
In response to the global financial crisis, the European Commission tasked a High Level Group, chaired by Mr Jacques de Larosière, to consider how the European supervisory arrangements could be strengthened both to better protect its citizens and to rebuild trust in the financial system. Among its many conclusions, the Group highlighted that supervisory arrangements should not only concentrate on the supervision of individual firms but also place emphasis on the stability of the financial system as whole. In 2009, the de Larosière report recommended, among other things, that a Union level body be established with a mandate to oversee risk in the financial system as a whole. On 16 December 2010 the legislation establishing the ESRB entered into force:
The ESRB is part of the European System of Financial Supervision (ESFS), the purpose of which is to ensure supervision of the Union's financial system. Besides the ESRB, the ESFS comprises: the European Banking Authority (EBA); the European Insurance and Occupational Pensions Authority (EIOPA); the European Securities and Markets Authority (ESMA); the Joint Committee of the European Supervisory Authorities (ESAs); and the competent or supervisory authorities in the Member States as specified in the legislation establishing the three ESAs.
The ESRB contributes to the prevention or mitigation of systemic risks to financial stability in the Union that arise from developments within the financial system. It takes into account macroeconomic developments, so as to avoid periods of widespread financial distress. The ESRB also contributes to the smooth functioning of the internal market and thereby ensures a sustainable contribution of the financial sector to economic growth.
The Chair of the ESRB is the President of the European Central Bank, Mr Mario Draghi. The first Vice-Chair of the ESRB is Sir Mervyn King, Governor of the Bank of England. He was elected by the members of the General Council of the ECB on 16 December 2010 for five years. The second Vice-Chair of the ESRB will be the Chair of the Joint Committee of the European Supervisory Authorities.
Hearing on the ESRB before the Committee on Economic and Monetary Affairs of the European Parliament
Introductory Statement by Mervyn King, 1st Vice Chair of the ESRB, Brussels
2 May 2011
ESRB Press Release
European Systemic Risk Board Meeting
18 March 2011