Specific macroprudential tools are currently within the remit of BaFin
Macroprudential tools: The FSA does not equip the FSC with specific macroprudential tools
(these are currently within the remit of BaFin). As a result, the FSC will need to engage with
its member institutions to ensure that any such tools are applied effectively. The need for
dialogue and communication will arise both initially (at the time of developing the tools) and
at a later stage (when their mobilisation may be necessary). This dialogue will be critical to
foster a common understanding on the use of the instruments, their impact, as well as on their
effectiveness and potential unintended consequences.
As previously noted, the macroprudential tools that are currently available to the German
authorities are those specified in CRD IV/CRR. Experience from other countries indicates
that such tools may not be sufficient to address certain types of systemic risks and that other
tools may also be needed.
In Germany, however, the legislative process necessary to deploy
a new macroprudential tool may last longer than desirable, especially during times of stress
when prompt action is needed. In addition, this legislative process may itself generate
undesirable market behaviour, such as an acceleration of risky practices before the FSC
recommendation for the tool is adopted. As a result, it is desirable to define ex ante (to the
extent possible) a macroprudential toolkit instead of waiting for specific risks to emerge
before proposing and adopting new tools.