EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 17 July 2012  
on the strengthening of financial supervision a nd establishment of a financial stability committee 
(CON/2012/55) 
 
Introduction and legal basis 
On 14 May 2012, the European Central Bank (ECB) received a request from the German Federal 
Ministry of Finance for an opinion on a draft law on  the strengthening of Germ an financial supervision 
(hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and sixth indents of Article 2(1) of Council Decision 
98/415/EC of 29 June 1998 on the consultation of  the European Central Bank by national authorities 
regarding draft legislative provisions1, as the draft law relates to the Deutsche Bundesbank and to rules 
applicable to financial institutions insofar as they materially influence the stability of financial institutions 
and markets. In accordance with the first sentence of  Article 17.5 of the Rules of Procedure of the 
European Central Bank, the Governing Council has adopted this opinion. 
 1.  Purpose of the draft law 
1.1 The draft law is aimed at further strengtheni ng the institutional arrangements through which micro-
prudential supervision of  financial services operators and macro-prudential oversight of the 
financial system are exercised. It fosters smooth cooperation between the Federal Ministry of Finance, the Deutsche Bundesbank and the Federal Financial Supervisory Authority (hereinafter 
‘BaFin’) with regard to the early identification of and reaction to systemic risks arising in the 
financial system, taking also into  account Union level developments
2.  
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  Such developments contain in particul ar the establishment of the European System of Financial Supervision (ESFS) by a 
set of Union regulations adopted in December 2010; see Re gulation (EU) No 1092/2010 of the European Parliament and 
of the Council of 24 November 2010 on European Union macr o-prudential oversight of the financial system and 
establishing a European Systemic Risk Board (OJ L 331, 15.12.2010, p. 1); Regulat ion (EU) No 1093/2010 of the 
European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European 
Banking Authority (OJ L 331, 15.12.2010, p.  12), Regulation (EU) No 1094/2010 of th e European Parliament and of the 
Council of 24 November 2010 establishing a European Superv isory Authority (European Insurance and Occupational 
Pensions Authority) (OJ L 331, 15.12.2010, p. 48, and Regula tion (EU) No 1095/2010 of the European Parliament and of 
the Council of 24 November 2010 establishi ng a European Supervisory Authorit y (European Securities and Markets 
Authority, (OJ L 331, 15.12.2010, p. 84) and Council Re gulation (EU) No 1096/2010 of 17 November 2010 conferring 
specific tasks upon the European Central Bank concerning the functioning of the European Systemic Risk Board 
(OJ L 331, 15.12.2010, p. 162). 
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2 1.2 Article 1 of the draft law introduces the Law on financial stability overs ight (hereinafter the 
‘proposed Law on financial stability oversight’), whic h in particular concerns the establishment of 
a Financial Stability Committee and the strengthening of the financial stability (macro-prudential) 
role of the Deutsche Bundesbank. 
1.2.1 Establishment of a Financial Stability Committee  
The Financial Stability Committee (hereinafter th e ‘Committee’) will be composed of: (a) three 
representatives from the Federal Ministry of Finance, including the Chair and the Vice-Chair of the Committee, (b) three Deutsche Bundesbank represe ntatives, (c) three BaFin representatives, and 
(d) the Chair of the Management Board of the Financial Market Stabilisation Authority 
participating in the Committee without voting rights
3. The Committee’s decisi ons are adopted by a 
simple majority of its members unless specified to the contrary4. The Committee will be 
responsible for, inter alia , advising on the handling of warnings and recommendations issued by 
the European Systemic Risk Board (ESRB) under Article 16 of Regulation (EU) No 1092/20105 
and for adopting its own non-binding warnings a nd recommendations concerning risks to financial 
stability, addressed to German public authorities6. The recipients of the Committee’s warnings and 
recommendations will be obliged to notify the Committee as regards the timeline for their 
implementation or to explain non-action. The wa rnings and recommendations may be made public 
after giving the recipient an opportunity to comment7.  
1.2.2 Strengthening the financial stability (macro-p rudential) role of the Deutsche Bundesbank   
The Deutsche Bundesbank’s mandate will be compleme nted with the task of contributing to the 
stability of the financial system, in particular through: (a) analysing issues affecting financial 
stability and identifying arising risks, and (b) providing analytical support to the Committee, inter 
alia, through making proposals for the Committee’s warnings and recommendations and evaluating 
their implementation8. Moreover, the Committee may not adopt decisions concerning (a) the 
adoption and publication of its warnings and r ecommendations; or (b) the adoption of its annual 
reports submitted to the Parliament in the cas es where the Deutsche Bundesbank representatives 
cast a block vote9. The Deutsche Bundesbank will also ac quire the right to impose specified 
reporting requirements on the financial service providers falling within the sector ‘Financial corporations’ as defined in Regulation (EC) No 2223/96
10. In addition, the Deutsche Bundesbank 
                                                 
3  Article 1, Section 2(3) of the draft law.  
4  Article 1 first sentence of Section 2(5) of the draft law. 
5  Article 1, Section 2(2) No 3 of the draft law.  
6  Article 1 Section 3 of the draft law. 
7  Article 1, Section 2(2) No 5, second sentence of Section 2(5), and Section 3 of the draft law.  
8  Article 1, Section 1(1) of the draft law.  
9  Article 1, third sentence of Section 2(5) of the draft law. 
10  Article 1 Section 5 of the draft law;  see Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of 
national and regional accounts in the Co mmunity (OJ L 310, 30.11.1996, p. 1).  
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3 and BaFin will be required to share all information relevant for the performan ce of their respective 
tasks11.   
1.3 Article 2 of the draft law amends the Law on the Federal Financial Supervisory Authority 
(hereinafter the ‘Law on BaFin’)12 by: (a) replacing members of BaFin’s Supervisory Board 
appointed by the supervised entities with independent experts13, and (b) enhancing BaFin’s 
consumer protection function by establishing a C onsumer Advisory Board, appointed by the 
Federal Ministry of Finance, to advise BaFin in the performance of its supervisory tasks from a 
consumer perspective14.  
 2. General observations   
2.1 The ECB has assessed the draft law taking into account its previous opinions  on national financial 
stability committees, and the present state of deve lopment of Union legislation concerning the 
exercise of macro-prudential oversight. The ECB understands that the ESRB will assess the follow-
up to its Recommendation ESRB/2011/3 of 22 Decemb er 2011 on the macro-prudential mandate of 
national authorities
15. 
2.2 As a result of advanced legislative proposals at  Union level, Member States may be required to 
designate an authority for the exercise of speci fic binding macro-prudential powers in relation to 
supervised entities within their jurisdiction16. The adoption of such Union legislation may require 
future adjustments to the macro-prudentia l framework laid down under the draft law. 
  3. The Deutsche Bundesbank’s role in the Committee 3.1 Performance by the central bank of macro-prudential oversight tasks  
The ECB supports that the proposed institutiona l framework for macro-prudential oversight 
recognises the essential role played by the central bank
17. It also welcomes the adequate 
representation of the Deutsche Bundesbank in th e Committee, the performance by the Deutsche 
Bundesbank of analytical tasks in support of  the Committee and the fact that Deutsche 
Bundesbank’s consent will effectively be require d for the adoption and publication of Committee 
warnings and recommendations. 
                                                 
11  Article 1, Section 4 of the draft law.  
12  Finanzdienstleistungsaufsichtsgeset z as published in the announcement of 22 April 2002, Bundesgesetzblatt I , p. 1782, as 
amended. 
13  The Board will consist of six people with expertise in the ar ea of finance and insurance, inst ead of ten representatives of 
the supervised companies. Article 2, Section 5 of th e draft law, amending Section 7 of the Law on BaFin. 
14  Article 2 Section 6 of the draft law, in serting Section 8a in  the Law on BaFin. 
15  OJ C 41, 14.2.2012, p. 1, Section 2(4)(2).  
16  See in this respect the relevant provi sions of the proposed regulation of the Eu ropean Parliament and of the Council on 
prudential requirements for credit institutions and invest ment firms (COM (2011) 452). See the Council’s general 
approach of 21 May 2012, available on the C ouncil’s website at www. consilium.europa.eu. 
17  See e.g. paragraph 5 of Opinion C ON/2004/16, paragraph 2.3 of Opinion C ON/2010/10 and paragraph 5.1 of Opinion 
CON/2012/44. See also recital 24 of Regulation (EU) No 1092/2010. 
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4 3.2 At the same time, the performance of these ne w tasks should not affect: (a) the Deutsche 
Bundesbank’s institutional, functional and financia l independence, or (b) the performance by the 
ESCB of its tasks under the Treaty and the Statute of  the European System of Central Banks and of 
the European Central Bank18. In this respect, the ECB welcomes the express confirmation in the 
draft law19 that: (i) the assignment to the Deutsche Bu ndesbank of the new macro-prudential tasks 
should not affect its present competences, and (ii) the central bank independence principle defined in the Law on Deutsche Bundesbank
20 should apply also to the exercise of such new tasks. 
Similarly, the ECB expects that the performance by the Deutsche Bundesbank of the tasks laid 
down in the draft law will comply with the prohib ition of monetary financ ing under Article 123(1) 
of the Treaty, read in conjunction with Council Regulation 3603/93/EC21. In particular, the 
Deutsche Bundesbank’s new tasks pe rformed in support of the Committee should not give rise to 
any form of overdraft facility or any type of  credit facility provided for the public sector. 
3.3 Central bank access to macro-prudential information  
The Deutsche Bundesbank should have the competence to require and obtain in a timely fashion all 
national data and information re levant for the exercise of its newly assigned macro-prudential 
tasks. Hence, the ECB welcomes  the arrangements introduced by the draft law under which: 
(a) BaFin and the Deutsche Bundesbank should communicate all relevant information to one 
another whereby data stored at the ot her body may be retrieved automatically22, and (b) the 
Deutsche Bundesbank is entitled to collect informati on from financial corporations on the basis of a 
statutory instrument issued by the Federal Minist ry of Finance in consultation with the Deutsche 
Bundesbank, should the data available from BaFi n and other authorities be insufficient for the 
fulfilment of the Deutsche Bundesbank’s tasks de fined in the proposed Law on financial stability 
oversight23. The ECB understands that the draft law24 ensures that the confidentiality obligations 
imposed on the staff of the Deutsche Bundesb ank and BaFin should not prevent effective 
information sharing amongst these institutions25, also as regards sharing of disaggregated 
supervisory or statistical information.  
 
                                                 
18  See, e.g. paragraph 4 of Opinion CON/2009/88, paragrap h 2.2.4 of Opinion CON/2010/7 and paragraph 2.9 of Opinion 
CON/2010/10. 
19  Article 1, Section 1(2) of the draft law. 
20  Gesetz über die De utsche Bundesbank,  as published in the announcement of 22 October 1992, Bundesgesetzblatt I , 
p. 1782, as amended, Section 12. 
21  Council Regulation (EC) No 3603/93 of 13 December 1993 specify ing definitions for the application of the prohibitions 
referred to in Articles 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 
22  Article 1, Section 4(2) of the draft law. 
23  Article 1, Section 5 of the draft law; information that ma y be collected by the Deutsche  Bundesbank may cover all data 
that allow deep insight into the status and the development of the economic condit ions for the financial corporations and 
into their on-going business operations, e.g.  balance sheet and off-balance sheet figures collected and the firm and group 
level, as well information on group struct ures, bilateral relations, ri sk management practices a nd solvency and liquidity 
status. 
24  Article 1, last sentence of Section 4(2) of the draft law. 
25  Section 32 of the   Law on Bundesbank and Section 11 of the Law on BaFin. 
ECB-PUBLIC 
5 4. Cross-border cooperation 
4.1 General cooperation and information-sharing arrangements 
National provisions establishing national financial stability committees should be consistent with 
the Union law provisions that regulate the excha nge of supervisory and statistical information26 and 
that establish the ESRB as a Union body responsible for macro-prudential oversight of the financial 
system within the Union27. While the ECB understands that the members of the Committee are 
already bound by such Union law provisions, Sec tion 2 of the proposed Law on financial stability 
oversight should expressly mandate the Committee to  cooperate with the ESRB and, where needed, 
with the macro-prudential authorities of the other Me mber States, in particular as regards exchange 
of information28. To this end, the ECB further unders tands that confidentiality obligations 
established by the draft law for staff involved in Committee work29 do not limit the possibility for 
the Committee to engage in cross-border cooperati on and information-sharing since Section 6 of 
the proposed Law on financial stability oversight refe rs to exclusions from the confidentiality rules 
under Section 9(1) of the Law on Banking as appli cable to cross-border sharing of all types of 
information obtained by the Committee30.  
4.2 Cooperation concerning  warnings and recommendations 
National financial stability committee actions shoul d not conflict with but rather complement 
ESRB actions taken at Union level31. Hence, the ECB recommends that Section 3 of the proposed 
Law on financial stability oversight states that the Committee closely liaises with the ESRB and informs the ESRB of all actions taken to address systemic risks at national level
32, and further, that 
it informs the ESRB prior to the issuance or the publication of its warnings and recommendations 
addressed to German authorities, if significant cros s-border effects are to be expected. Provision of 
such advance information on Committee warnings and recommendations is necessary, given their 
                                                 
26  See paragraph 3.2 of Opinion CON/2008/39 and paragraph 2.2.6 of Opinion CON/2010/7; see, e.g., Article 12 of 
Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insura nce undertakings and investment firms in a financial conglomerate (OJ L 35, 
11.2.2003, p. 1), Article 58(5) of Directive 2004/39/EC of th e European Parliament and of the Council of 21 April 2004 
on markets in financial instru ments (OJ L 145, 30.4.2004, p. 1), Article 49 of Directive 2006/48/EC relating to the taking 
up and pursuit of the business of credit institutions (OJ L 177, 30.6.2006, p. 1), Article 70 of the Directive 2009/138/EC 
of the European Parliament and of the Council of 25 November 2009 on the taking up and pursuit of the business of 
insurance and reinsurance (Solvency II) (OJ L 335, 17.12.2009,  p. 1) and Article 1(4) of Regulation (EU) No 1092/2010, 
and paragraph 5.3 of Opinion CON/2012/44; see also Article 57(aa) of the Proposal for a Directive of the European 
Parliament and of the Council on the access to the activity of  credit institutions and the prude ntial supervision of credit 
institutions and investment firms and am ending Directive 2002/87/EC of the European Parliament and of the Council on 
the supplementary supervision of cred it institutions, insurance undertakings and investment firm s in a financial 
conglomerate (‘CRD IV’), Council ge neral approach of 21 May 2012. 
27  See Article 3(1) of Regulation EU (No) 1092/2010. 
28  See paragraph 5.3 of opinion CON/2012/44. See also Articl e 57(aa) of Proposal for a Directive of the European 
Parliament and of the Council on the access to the activity of  credit institutions and the prude ntial supervision of credit 
institutions and investment firms and am ending Directive 2002/87/EC of the European Parliament and of the Council on 
the supplementary supervision of cred it institutions, insurance undertakings and investment firm s in a financial 
conglomerate, Council genera l approach of 21 May 2012. 
29  Article 1 Section 2(6) and Section 6 of the draft law. 
30  Article 1 Section 6 of the draft law. 
31  See paragraph 2.2.2 of Opinion CON/2010/7 and paragraph 2.11 of Opinion CON/2010/10. 
32  See Section B4 of Recommendation ESRB/2011/3. 
ECB-PUBLIC 
6 potential overlap in substance with analogous ESR B instruments, the need to avoid conflicting 
policy messages produced at Union and national level,  and the need to ensure the effectiveness of 
the ESRB’s warnings and recommendations33. 
 
This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 17 July 2012. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
                                                 
33  See paragraph 2.2.2 of Opinion CON/2010/7 and paragraph 2.11 of Opinion CON/2010/10.