Deliberations and decision-making
Deliberations and decision-making: The German authorities are of the view that FSC
members participate in the deliberations primarily as official representatives of their
respective institutions, but also in a personal capacity.
Such an arrangement may
foster more open and frank discussions within the FSC, but it may also lead to
confusion if the members are called upon to reach a decision (e.g. For the issuance of a
warning or recommendation) that potentially binds their institutions without providing
an opportunity for prior consultation within their respective institutions. Moreover,
decision-making by the FSC, particularly on key issues, is supposed to be based on
consensus. Failure to reach consensus does not mean that a majority decision cannot
be taken (recognising that the Bundesbank retains a veto with respect to key
decisions) or that the member institutions cannot act unilaterally based on their own
A consensus-driven approach has strong merits in terms of reaching
a common understanding of systemic risks and facilitating the coordinated
implementation of measures to address them, but there are also possible downsides.
One such example is the risk of inaction arising from the efforts by any one member
institution to reach consensus within the FSC (to avoid being seen as proceeding
unilaterally). Conversely, the potential market signal and implications for the FSC’s
functioning if member institutions were to take independent action on issues that fall
within the scope of the FSC may need to be examined.
It would therefore be
important for the German authorities to develop protocols and procedures for
reconciling diversity of views in decision-making.