The purpose of macroprudential supervision is to limit systemic risks and strengthen the resilience of the financial system. It is preventative in nature, monitoring key developments in all sectors of the financial system that could pose potential threats to financial stability in Germany.
Core elements of macroprudential supervision comprise:
- Monitoring the risk situation and the resilience of the financial system
- Communicating risks to financial stability
- Issuing warnings and recommendations
- Use of macroprudential tools
The Financial Stability Committee generally meets once a quarter. It analyses and assesses risks to financial stability. On the basis of its risk assessment, it considers whether, and in what form, macroprudential action is required.
Although a great deal of information is shared at the European and international levels, macroprudential policy remains primarily a national responsibility. This system was implemented by means of the Recommendation of the European Systemic Risk Board (ESRB) of 22 December 2011 on the macro-prudential mandate of national authorities. The aim of the recommendation was to strengthen macroprudential supervision, with its focus on the financial system as a whole. Another objective was to create closer links between macroprudential supervision and microprudential supervision, which focuses primarily on individual financial intermediaries. The national focus is supplemented by information-sharing at the European and international levels, for example within the ESRB and the Financial Stability Board (FSB).