The increasing integration of financial markets in recent decades has given rise to global markets in which multinational financial enterprises operate. This process was even further reinforced in the EU by means of a (minimum) harmonization of the regulatory framework and by introducing the euro as the common currency in euro area countries. In light of these developments, it is necessary to ensure close cooperation not only on the national level but also among central banks and regulatory authorities on the international and European level in order to respond appropriately to the risks (e.g. contagion risk in financial crises, etc.) involved in this integration process (which is generally to be welcomed and supported) and to optimize supervisory processes.
In this context, the Banking Supervision Committee (BSC) of the European System of Central Banks (ESCB), which consists of all central banks (including the OeNB) and banking supervisory authorities in the EU, as well as the committee’s working groups (Working Group on Macroprudential Analysis, Working Group on Developments in Banking, Task Force on Crisis Management) play an especially important role. In accordance with the ESCB’s duty under Article 105 paragraph 5 of the Maastricht Treaty to contribute to the smooth conduct of national policies pursued by competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system, the BSC’s duties include the following:
- to observe and analyze stability-related developments in the banking sector of the EU/euro area countries and other financial sectors;
- to analyze the effects of regulatory and supervisory requirements on the stability and structure of the financial system and on financing conditions; and
- to promote cooperation and the exchange of opinions between central banks and supervisory authorities in matters of common interest (e.g. special arrangements for cooperation in crisis situations were agreed upon in a memorandum of understanding drawn up by the BSC).
Furthermore, the OeNB is also represented in the newly founded Committee of European Banking Supervisors (CEBS), which performs the duties of a Level 3 committee within the framework of the Lamfalussy committee structure. The CEBS’s duties are as follows:
- to advise the European Commission, in particular as regards the preparation of drafts implementing measures in the banking sector;
- to contribute to the consistent implementation of EU directives and to the convergence of regulatory practices in EU Member States; and
- to enhance supervisory cooperation, including the exchange of information on the institutions under supervision.
Therefore, while the BSC mainly focuses on macroprudential supervision and stability, the CEBS is primarily concerned with microprudential, regulatory and convergence-related issues, which means that the activities of the two committees complement each other. Moreover, CEBS cooperates with the Level 3 committees for the securities and insurance sectors (CESR and CEIOPS, respectively). This multi-sector cooperation is gaining importance due to the complex financial groups (financial conglomerates) which have arisen and due to the blurring boundaries between various areas of finance.
Finally, the OeNB is also represented in the Economic and Financial Committee (EFC) when it discusses issues relevant to the stability of financial markets.