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Review of the European System of Financial Supervision (ESFS) – European Systemic Risk Board (ESRB)

08.08.2014 - Report on the mission and organisation of the European Systemic Risk Board (ESRB): The ESRB has established itself as a key component of Europe’s system of financial supervision but there is room for enhancing the efficiency of macro-prudential oversight at EU level.

Commission report on the European Systemic Risk Board (ESRB)

In the framework of the review process on the European System of Financial Supervision (ESFS), today, the Commission has adopted a Report on the mission and organisation of the ESRB. The Report is accompanied by a Staff Working Document

In parallel, the Commission has adopted and published a Report on the operations of the three European Supervisory Authorities (ESAs) and the European System of Financial Supervision (ESFS) which is also accompanied by a Staff Working Document.

The European System of Financial Supervision (ESFS)

The creation of the European System of Financial Supervision (ESFS) came as a result of the 2009 de Larosière Report aimed at strengthening European supervisory arrangements in order to better protect citizens and rebuild trust in the financial system.

The ESFS consists of the three European Supervisory Authorities (ESAs), the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA), and the European Systemic Risk Board (ESRB).

The ESRB and the three ESAs started their work in January 2011.

Review of the ESFS (2013)

The regulations establishing the European Supervisory Authorities (ESAs) and the European Systemic Risk Board (ESRB) include provisions for a review of their structure and performance within the ESFS and the ESFS as a whole.

Consultation on the review of the European System of Financial Supervision

A consultation was held in mid-2013 in the framework of the review process:

Public Hearing on Financial Supervision in the EU

The Commission also organised a high-level conference on Financial Supervision in the EU on 24 May 2013 in Brussels. The purpose of this public hearing was to offer a platform for representatives of the ESRB and the ESAs, together with other key stakeholders, to discuss the achievements of the individual authorities and to reflect on the effectiveness of the ESFS as a whole, taking into account the possible impact of the Single Supervisory Mechanism.

The European Systemic Risk Board

The European Systemic Risk Board (ESRB) was established in 2010 as a component of the new European System of Financial Supervision (ESFS), together with the European Supervisory Authorities (ESAs).

The ESRB was created in response to the financial crisis following the 2009 de Larosière Report. It is the EU body charged with oversight of the financial system as a whole. The ESRB's role is to contribute to the prevention and mitigation of systemic risks to financial stability in the EU through issuing warnings and recommendations for action.

The crisis exposed not only shortcomings in the supervision of individual institutions, and deficiencies in the relationships between national supervisors, but also a failure, on an EU level, to focus on the interdependence within the financial sector and the inability to predict, monitor and address risks to the entire system threatening financial stability (and, therefore, the 'real economy').

Legislative framework

The legislative framework establishing the ESRB entered into force on 16 December 2010:

  • Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (the ‘ESRB Regulation’); and
  • Council Regulation (EU) No 1096/2010 of 17 November 2010 conferring specific tasks upon the European Central Bank concerning the functioning of the European Systemic Risk Board.

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