Establishment of the Financial Stability Committee

Background
Prior to the establishment of the Financial Stability Committee (Ausschuss für
Finanzstabilität, FSC) in 2013, there was no explicit authority in charge of macroprudential
oversight. Financial stability was an important, albeit somewhat implicit, part of the mandates
of the institutions now represented on the FSC (see below). A Standing Committee on
Financial Market Stability (Ständiger Ausschuss für Finanzmarktstabilität), consisting of
delegates from the BMF, the Bundesbank and BaFin, discussed financial stability issues but
had no explicit legal mandate or powers.

The FSAP noted the need for the Bundesbank’s macroprudential responsibilities and powers
to be clearly defined and to include not only identifying systemic risks but also formulating
recommendations for action to mitigate these risks, including through structural reforms. It
recognised that the Bundesbank will not necessarily have decision-making power over most
relevant instruments and suggested that consideration be given to the introduction of an “act
or explain” requirement if public argumentation is insufficient to elicit action by other
relevant authorities.

The FSAP also noted the need for the authorities to operationalise their
plans to strengthen macroprudential supervision and, to support the new macroprudential
function, it recommended the frequent and open exchange of information between macro and
microprudential supervisors.