The FSC also does not have the power to direct the addressees of its recommendations;
instead, the FSA contains a “comply or explain” framework whereby the addressee of a
recommendation is required to notify the FSC within a reasonable period of time about its
progress in implementing the recommendation or explain in detail the reasons for non-
compliance. The FSA assigns the responsibility for monitoring of this follow-up procedure to
the Bundesbank. The detailed process by which the FSC develops, issues and follows up on
recommendations remains work in progress.
Currently, one of the main areas of focus for the FSC is operationalising the macroprudential
tools provided under CRD IV/CRR and embedding them in a comprehensive
macroprudential strategy. While these tools will be deployed by BaFin, the FSC is playing a
role in their calibration and could make recommendations to BaFin about their deployment.
The FSC intends to extend the range of available macroprudential instruments if financial
stability concerns make this necessary, consistent with the 2013 ESRB recommendation.