The increasing complexity of financial markets requires close collaboration between all institutions and bodies responsible for safeguarding financial stability. Cooperation must take place both at the national and at the international level, and both in everyday practice and in crisis situations.
The following institutions are key to maintaining financial stability at the European level:
European System of Central Banks (ESCB) and Eurosystem
The Oesterreichische Nationalbank (OeNB) is an integral part of the Eurosystem and of the European System of Central Banks (ESCB).
The Eurosystem comprises the European Central Bank (ECB) and the national central banks of the euro area Member States. The Eurosystem conducts the monetary policy of the euro area.
The ESCB comprises the ECB and the national central banks of both euro area and non-euro area EU Member States. As long as there are EU countries that are not part of the euro area, the Eurosystem and the ESCB will continue to exist side by side.
Financial Stability Committee (FSC)
The Financial Stability Committee (FSC) of the Eurosystem/ESCB was set up in January 2011 to advise and support the Governing Council of the ECB in the fulfillment of its tasks relating to financial stability.
In particular, the FSC contributes to identifying systemic risks to financial stability in the euro area, analyzing regulatory plans and enhancing prudential supervision and crisis management in the EU.
European System of Financial Supervision (ESFS)
The European System of Financial Supervision (ESFS) was established in early 2011 with a view to safeguarding the consistent application of financial sector rules in the Single Market. In doing so, the ESFS is to contribute to the maintenance of financial stability and of confidence in the financial system as a whole, and to the adequate protection of financial services consumers.
The ESFS consists of:
- the European Systemic Risk Board (ESRB)
- 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 and
- the relevant authorities in the Member States
European Systemic Risk Board (ESRB)
The European Systemic Risk Board (ESRB), which started operation in 2011, is responsible for the macroprudential oversight of the financial system in the EU. The Governor of the Oesterreichische Nationalbank (OeNB) is a voting member of the ESRB General Board.
The mission of the ESRB is to contribute to the prevention or mitigation of systemic risks to financial stability in the EU to avoid periods of financial distress. In doing so, the ESRB also takes into account macroeconomic developments. Its work is to ensure that the financial sector provides a sustainable contribution to economic growth.
To achieve these objectives, the ESRB has been assigned the following tasks:
- identifying and prioritizing systemic risks;
- issuing warnings where such risks are deemed significant and, where appropriate, make those warnings public;
- issuing recommendations for remedial action in response to the risks identified and, where appropriate, making those recommendations public;
- monitoring the follow-up to warnings and recommendations;
- cooperating closely with all the other parties to the European System of Financial Supervision (ESFS); and
- coordinating its actions with those of international financial organizations, particularly the International Monetary Fund (IMF) and the Financial Stability Board (FSB) as well as the relevant bodies in third countries on matters related to macroprudential oversight.
The following institutions are of particular importance in maintaining financial stability at the international level:
International Monetary Fund (IMF)
The International Monetary Fund is a specialized agency of the United Nations headquartered in Washington, D.C. Its mandate includes promoting international collaboration in monetary policy, increasing world trade, stabilizing exchange rates, providing financial assistance and monitoring monetary policies.
In particular, the IMF carries out consultations with member countries regarding economic and financial developments as required under Article IV of its Articles of Agreement. In Austria, OeNB representatives are among the national experts taking part in these Article IV consultations with the visiting team of IMF economists.
The Financial Sector Assessment Program (FSAP) is another key surveillance tool of the IMF. Introduced in 1999, it encompasses a comprehensive and detailed analysis of a country’s financial sector. FSAP results, which also feed into Article IV consultations, are presented as Financial System Stability Assessments (FSSA).
Financial Stability Board (FSB)
The Financial Stability Board (FSB) is an international organization that brings together national authorities and international institutions responsible for maintaining financial stability. It was established at the G-20 summit in April 2009 in London as the successor to the Financial Stability Forum, which had been founded in 1999 in the wake of the Asian crisis. Compared with its predecessor, the FSB has more members and a broader mandate.
The tasks of the FSB include:
- identifying vulnerabilities in the international financial system;
- proposing action to address these vulnerabilities and to monitor their implementation;
- coordinating regulatory and prudential policies in the financial sector at the international level; and
- enhancing the exchange of information between relevant supervisory institutions.
The member institutions of the FSB are the central banks, financial ministries and/or supervisory authorities of the G-20 countries and Hong Kong, the Netherlands, Singapore, Spain and Switzerland as well as the European Central Bank, the European Commission, international organizations and standard-setting bodies.
FSB Regional Consultative Groups
The FSB established Regional Consultative Groups in 2011 to involve institutions from non-member countries in the work of the FSB and to foster the exchange of information among each other.
There are Regional Consultative Groups for the Americas, the Commonwealth of Independent States, Europe, the Middle East and North Africa, and Sub-Saharan Africa. For Austria, representatives of the OeNB, the Financial Market Authority (FMA) and the Federal Ministry of Finance take part in the Regional Consultative Group for Europe.
Bank for International Settlements (BIS)
The Bank for International Settlements (BIS) is an international financial organization headquartered in Basel (Switzerland). Its tasks include assisting central banks in the management of their foreign reserves. Therefore, the BIS is also referred to as the bank for central banks.
The BIS also hosts the following bodies:
- Basel Committee on Banking Supervision: The Basel Committee as a forum of regular cooperation on banking supervision. In particular, it aims to enhance the understanding of key supervisory issues and to improve the quality of banking supervision worldwide. It develops and continually improves guidelines and standards in banking supervision (e.g. Core Principles for Effective Banking Supervision).
- Committee on Payment and Settlement Systems (CPSS): The CPSS has been established with a view to developing standards for payment and securities settlement systems. Promoting soundness and efficiency in payment and securities settlement systems, the CPSS contributes to strengthening financial market infrastructures and hence financial stability.