The European Systemic Risk Board – governance and early experience

Abstract

The European Systemic Risk Board is charged with the macroprudential oversight of the financial system in the European Union. We compare and contrast the ESRB with the U.S. National Transportation Safety Board, which some scholars proposed as a role model for systemic risk management. There are parallels and some differences between these organisations. Neither institution has direct regulatory power, which could paradoxically be beneficial as it may help preserve their independence and objectivity in the long run. We also review the ESRB's activities after it started in 2010 and assess the effect of its first public recommendation.

An Introduction: “Macroeconomic Policy Coordination and Domestic Politics: Policy Coordination in the EU from the European Semester to the Covid‐19 Crisis”*

“…Additionally, the role of the Council vis‐à‐vis that of the Commission in approving the content of CSRs offers support to Putnam's framework of ‘two‐level games’ between domestic and international levels in which national governments are acting on behalf of, and reaction to, powerful and entrenched domestic interests (Putnam, 1988). Nevertheless, a number of scholars pointed out that supranational institutions, such as the European Commission, did gain in influence during the euro crisis as well (Bauer and Becker, 2014; Dehousse, 2016; Savage and Verdun, 2016) and the European Central Bank massively expanded when the Single Supervisory Mechanism was added to the ECB in Frankfurt in 2014 (Reuters, 2013; Heldt and Mueller, 2020) including setting up the European Systemic Risk Board (Ehrmann and Schure, 2020). Nicoli examines the neo‐neo functionalist framework of Schmitter to examine the creation of various EU institutional frameworks during the crisis and finds that the approach is able to explain a fair bit (Nicoli, 2020).…”

Introduction to “Economic and Financial Governance in the European Union after a decade of Economic and Political Crises.”

“…An example of one of these post-2008 institutions is the European Systemic Risk Board (ESRB), which Ehrmann and Schure (2020) analyze in composition and in action. The design of the ESRB lacks direct regulatory power, which some see as an example of the inefficiency of EU governance.…”

The difficult construction of a European Deposit Insurance Scheme: a step too far in Banking Union?

“…The examination of Ehrmann and Schure sheds some important light on the context of leadership, and authority within EMU and the EU as a wholea subject taken up by Schöller (Ehrmann and Schure 2020). A recurring question is whether institutions at the supranational level are "all bark but no bite"?…”