Wpływ Europejskiej Rady Ryzyka Systemowego na stabilność finansową w UE (The European Systemic Risk Board and its Impact on Financial Stability in the European Union)

Abstract

The article aims to answer a number of research questions. The first question concerns some major gaps in financial system regulation and in the safety net that have been exposed by the latest global financial crisis. Another question is how the banking sector will be influenced by the ongoing reforms in financial regulation and supervision. The article also examines the impact of the first three recommendations issued by the European Systemic Risk Board (ESRB) and the use of macroprudential tools on the functioning and stability of the financial system and the financial services market in the EU.

The research methods used by the author include a literature review, empirical studies, and a comparative method. The analysis of the first three recommendations issued by the ESRB and the potential use of macroprudential tools by national authorities leads the author to conclude that these recommendations and tools can have a significant impact on the functioning of the EU’s financial system. On the plus side, they can help strengthen financial stability and reduce systemic risk and the so-called contagion effect. However, this could take place at the expense of a negative effect on lending at the level of individual financial institutions. Other negative implications could include limited growth opportunities and constrained availability and variety of financial products and services offered, accompanied by increased supervisory and disclosure requirements. The benefits and the costs are likely to be unevenly distributed in time, according to the author. His analysis of reform measures so far indicates that benefits should be visible at the macroeconomic level, while the costs are likely to affect individual institutions at the microeconomic level.

The emergence of a banking union in the EU will have a profound impact on the functioning of the ESRB, as the European Central Bank (ECB) acting as a pan-European supervisor will become the target of the ESRB’s recommendations, which requires changes in the current relationships between the ESRB and the ECB. The challenges faced by the ESRB also include the need to develop an effective policy mix with the ECB’s monetary policy, compile a list of Systemically Important Financial Institutions (SIFIs), and develop a universal and objective method to assess the effectiveness of implementing ESRB recommendations.

Note: Downloadable document is in Polish.

Keywords: ESRB, macroprudential policy, financial stability, financial crisis

JEL Classification: E58, G01, G28