The President of the ECB is at the same time also the Chair of the ESRB and represents it. The central decision-making body is the General Board comprising the President and Vice-President of the ECB, the presidents/governors of the national central banks, a member of the European Commission, the Chairs of the EBA, EIOPA and ESMA, high-level representatives of the national competent supervisory authorities and the Chairs of the Advisory Committees.

For Germany, the Deutsche Bundesbank (as a voting member) and BaFin (non-voting member) are represented in the ESRB.

The General Board receives technical support from an Advisory Scientific Committee, an Advisory Technical Committee and a Steering Committee.

Recognising systemic risks in time

The ESRB’s main function is to monitor macroeconomic developments and to prevent and mitigate systemic risks to financial stability in the European Union. For these purposes the ESRB collects and analyses relevant data and information. Based on this information, it shall establish and rank systemic risks by priority. If significant risks to financial stability are identified, the ESRB can issue warnings and recommendations for remedial measures.

Both warnings and recommendations may be of a general or a specific nature. They may be addressed to the EU as a whole, to one or more Member States or one or more European or national supervisory authorities. The ESRB can also address recommendations on relevant EU regulations to the European Commission. Since its establishment in 2010, the ESRB has issued several warnings and numerous recommendations in different supervisory and risk areas.

The ESRB cannot compulsorily enforce its recommendations on those to whom they are addressed. But recommendations can be emphasized by political pressure. To be exact, the recommendations' addressees must notify the ESRB and the Ecofin Council of the measures they have taken to comply with the recommendations or provide adequate justification of why they have not implemented it (“act or explain” mechanism). The ESRB evaluates the answers of the individual addressees and assesses their degree of compliance. The results are summarised in a compliance report for each recommendation. If the ESRB determines that a recommendation has not been followed or that the addressee has not provided adequate justification for inaction, it informs the institution in question, the Ecofin Council and if necessary the European Supervisory Authority concerned, observing the rules of secrecy.