ESRB publishes guidance on macroprudential policy tools

Yesterday, the European Systemic Risk Board (ESRB) published guidance for EU member states on the usage of macroprudential policy tools. The publication of this guidance takes place against the background of the EU's new capital requirements directive and regulation (CRD IV/CRR), which entered into force at the start of the year and which grants member states the possibility of starting to use a number of new macroprudential policy tools.

Today's published guidance from the ESRB has two components:

A handbook targeted at national macroprudential authorities including concrete guidance on how various macroprudential policy tools can be used. This report discusses the tools' aims and effects and identifies indicators for the activation and calibration of the tools. The report also describes the legal conditions for using the various tools.


Guidance is provided for the following tools:


  • The countercyclical capital buffer
  • Real estate instruments
  • Instruments for systemic banks and structural risks
  • Liquidity instruments
  • The use of Pillar 2 for the purposes of macroprudential policy. National flexibility measures, i.e. seven tools that fall under Article 458 of the CRR (raised capital requirements, larger capital conservation buffers, stricter large exposure limits, measures for intra-financial sector exposures, public disclosure requirements, liquidity requirements, and raised risk weights for the residential and commercial property sector).

A flagship report that provides an overall description of how various macroprudential policy tools can be used. This report is targeted at high-level policy-makers in the member states, EU authorities, financial market participants, international forums and academics.


In relation to this, the ESRB also recently published:


A process for the assessment of new macroprudential policy measures. According to the EU's new capital requirements directive and regulation, the ESRB plays an important role in assessing the appropriateness of certain macroprudential policy measures at a national level. The ESRB is now publishing a process describing the manner in which this assessment should be made. This concerns a number of macroprudential policy instruments that the EU member states will have the opportunity to tighten up over a limited period, thereby counteracting systemic risks on the national level (Article 458 of CRR). Systemic risk buffer values over three per cent are also included.


"Now that the EU countries have the possibility to start using a number of new macroprudential policy tools, this guidance by the ESRB is welcome. Central banks and supervisory authorities in the EU have been intensively involved in this work. All EU countries have thus been able to contribute with their experiences and ideas on how to manage systemic risks. This work has also led to increased consensus on how these tools should be used, which is valuable. We need to think in fairly similar terms as regards these issues within the EU, considering the far-reaching financial integration in the region", says Stefan Ingves.

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