FRANKFURT (MNI) – The current crisis has shown the short-comings of
a micro-prudential approach to financial stability, European Central
Bank Vice President Vitor Constancio said on Monday.
Hence the new European Systemic Risk Board (ESRB) will fill an
important need in the European Union by identifying systemic risks and
mitigating their impact on the financial system, marking a “decisive
step towards a truly macro-prudential set-up”, the central banker said
at a dinner address here.
Constancio noted that the ESRB would be an independent
organisation, charged with identifying financial stability risks and
guiding authorities on appropriate action.
“Therefore, the lack of effectiveness in following up policy
concerns on risks with consistent actions, which was one of the previous
weaknesses of the financial stability framework, will be addressed,”
Constancio said.
“The ESRB, European and national authorities will act together so
that risk warnings will not go unheeded as they have been some times in
the past,” he asserted.
The central banker acknowledged that, aside from advising the
European Council, the ESRB would have no explicit powers related to
crisis management.
“Going forward, the quality of ESRB risk analysis, as well as the
timeliness and appropriateness of its recommendations, is crucial to
overcome some of the challenges stemming from its legal and
institutional framework.”
— Frankfurt Bureau: +49 69 720 142; email: frankfurt@marketnews.com —
[TOPICS: MT$$$$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]
