FRANKFURT (MNI) – The following is the second part of verbatim text
of European Systemic Risk Board Chair Mario Draghi’s introductory
statement given before the Committee on Economic and Monetary Affairs of
the European Parliament:

Macro-prudential policies in the EU
Banking union and the role of the ESRB

The ESRB has also reviewed the current plans on the banking union
and welcomes the European Commissions proposal. Board members consider
that the macro-prudential benefits of the Single Supervisory Mechanism
(SSM) would be enhanced if an adequate resolution regime for banks were
implemented without substantial delay. The Commissions initiatives for
establishing a single resolution mechanism to resolve banks and to
coordinate the application of resolution tools to banks under the
banking union are to be encouraged.

The ESRB is reflecting on the implications of the proposed SSM for
its own work. The Commissions proposal directly affects
macro-prudential policy and its implementation suggesting for the ECB
exclusive competence within the euro area to set counter-cyclical
buffer rates and any other measures aimed at addressing systemic or
macro-prudential risks in the cases specifically set out in Union acts.

The ESRB has repeatedly stressed that macro-prudential policies
should be sufficiently flexible to prevent the build-up of systemic
risks. Policy-makers should be encouraged to mitigate emerging risks as
soon as they are identified, rather than fostering a bias towards
inaction. Flexibility can be balanced by members coordination to
safeguard against potential negative externalities or unintended

The ESRB is working on a general framework for the coordination of
macro-prudential policies in the EU. First results can be expected in
the coming year.

Meanwhile, a review of the mission and organisation of the ESRB
itself will take place in 2013. Three members of the ESRB Steering
Committee Stefan Ingves, Chair of the Advisory Technical Committee,
Andr Sapir, Chair of the Advisory Scientific Committee, and Vtor
Constncio, Vice-President of the ECB will examine the functioning of
the ESRB, including in light of the forthcoming banking union. Follow-up
on ESRB recommendations

The ESRB is also working on first implementation of the act or
explain mechanism set out in the ESRB Regulation to ensure that
addressees respond properly to ESRB recommendations. The first set of
deadlines for replies to the ESRB recommendations issued in 2011 expired
in June 2012.

The current review suggests that the act or explain mechanism has
functioned smoothly. At the same time, more work lies ahead to enhance
our assessment framework. The ESRB Secretariat has contacted relevant
European and international institutions such as the Commission, the
IMF, the OECD, the FSB and the Bank for International Settlements to
learn from their experience. Conclusions

In concluding, I would like to emphasise that there is substantial
progress in the understanding of systemic risks and the design of
macro-prudential policies in the EU. This would not have been possible
without the active involvement and dedication of all ESRB member
institutions and committees.

On the occasion of the rotation of the Chair of the Advisory
Scientific Committee, I would like to thank in particular its first
Chair, Martin Hellwig, and to wish all the best to the new Chair, Andr
Sapir. I understand that you will have the opportunity to exchange views
with the Chair and Vice-Chairs of the Committee very soon.

Thank you very much for your attention. I am now at your disposal
for questions.

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