In addition to macroprudential surveillance, the ESRB relies on ‘soft’ (i.e. Communication) and
‘intermediate’ (i.e. Formal warnings or recommendations) macroprudential interventions. As
discussed above, the responsibility for ‘hard’ instruments lies primarily at the national level.
Some of these ‘hard’ instruments have an EU legal basis. This is notably the case for the banking
sector: the EU’s fourth Capital Requirements Directive (CRD IV) and accompanying regulation
(CRR) provide the legal basis for developing the macroprudential toolkit sketched out by Basel III. In
particular, the CRD IV/CRR includes provisions for a countercyclical capital buffer; a systemic risk
buffer; higher sector-specific risk weights; and various institution-specific capital buffers. The ESRB
is working to provide guidelines for the implementation of these tools and CRD IV/CRR give the
ESRB a coordination role among national authorities regarding the use of these tools.
Other macroprudential instruments or powers (e.g. Loan-to-income or debt-to-income ratio limits etc.)
can be defined through national legislation provided they remain within general EU parameters and
constraints (e.g. Provision prohibiting the loosening of microprudential ratios).