FSC itself does not ‘own’ any prudential instruments
Tools: Although the FSC itself does not ‘own’ any prudential instruments to support its
mandate, the institutions represented in it have comprehensive regulatory and supervisory
powers that can be deployed, taking due account of discussions within the FSC. Certain types
of non-prudential tools (e.g. Tax policies) may also be used if needed, although the authorities
point out that it would be difficult to apply them in practice as both the relevant
considerations and their effects are more complex.
The issuance and publication of warnings and recommendations constitute the core tools
available to the FSC in implementing macroprudential policies. Warnings and
recommendations can be addressed to the Federal Government, BaFin or other public bodies
(e.g. State authorities) in Germany.
The purpose of issuing warnings is generally to draw
attention to risks which might impair financial stability, while recommendations identify
measures that the FSC considers necessary to implement in order to avert risks to financial
stability. As previously mentioned, the FSA confers a veto power to the Bundesbank on such
decisions. The warnings and recommendations may be published, although the FSC may
choose not to publish them if it perceives that threats to financial stability can arise from their
publication. The authorities have, however, indicated that they consider non-publication to be
an exception rather than the rule.
EU Forecast
euf:ba.18.j:41/nws-01