Opinion of the European Central Bank of 17 July 2012 on the strengthening of financial supervision and establishment of a financial stability committee (CON/2012/55)
Date: 2012-07-17
Institutions: European Central Bank
Subjects: Germany, central bank, financial services, financial stability, financial supervision, national law, provision of services

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 17 July 2012  

on the strengthening of financial supervision and 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 German 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 strengthening 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 developments2.  

1  
2  

OJ L 189, 3.7.1998, p. 42.  
Such developments contain in particular the establishment of the European System of Financial Supervision (ESFS) by a 
set of Union regulations adopted in December 2010; see Regulation (EU) No 1092/2010 of the European Parliament and 
of  the  Council  of  24  November  2010  on  European  Union  macro-prudential  oversight  of  the  financial  system  and 
establishing  a  European  Systemic  Risk  Board  (OJ  L  331,  15.12.2010,  p.  1);  Regulation  (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 the European Parliament and of the 
Council  of  24 November  2010  establishing  a  European  Supervisory  Authority  (European  Insurance  and  Occupational 
Pensions Authority) (OJ L 331, 15.12.2010, p. 48, and Regulation (EU) No 1095/2010 of the European Parliament and of 
the  Council  of  24  November  2010  establishing  a  European  Supervisory  Authority  (European  Securities  and  Markets 
Authority, (OJ L 331, 15.12.2010, p. 84) and Council Regulation (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). 

 
 
 
 
                                                 
ECB-PUBLIC 

1.2  Article  1  of  the  draft  law  introduces  the  Law  on  financial  stability  oversight  (hereinafter  the 

‘proposed Law on financial stability oversight’), which 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  the  ‘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  representatives,  (c)  three  BaFin  representatives,  and 

(d) the  Chair  of  the  Management  Board  of  the  Financial  Market  Stabilisation  Authority 
participating in the Committee without voting rights3. The Committee’s decisions 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 and 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 warnings and recommendations may be made public 
after giving the recipient an opportunity to comment7.  

1.2.2  Strengthening the financial stability (macro-prudential) role of the Deutsche Bundesbank  

The  Deutsche  Bundesbank’s  mandate  will  be  complemented  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  recommendations;  or  (b)  the  adoption  of  its  annual 

reports  submitted  to  the  Parliament  in  the  cases  where  the  Deutsche  Bundesbank  representatives 
cast  a  block  vote9.  The  Deutsche  Bundesbank  will  also  acquire  the  right  to  impose  specified 

reporting  requirements  on  the  financial  service  providers  falling  within  the  sector  ‘Financial 
corporations’ as defined in Regulation (EC) No 2223/9610. In addition, the Deutsche Bundesbank 

3  
4  
5  
6  
7  
8  
9  
10  

Article 1, Section 2(3) of the draft law.  
Article 1 first sentence of Section 2(5) of the draft law. 
Article 1, Section 2(2) No 3 of the draft law.  
Article 1 Section 3 of the draft law. 
Article 1, Section 2(2) No 5, second sentence of Section 2(5), and Section 3 of the draft law.  
Article 1, Section 1(1) of the draft law.  
Article 1, third sentence of Section 2(5) of the draft law. 
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 Community (OJ L 310, 30.11.1996, p. 1). 

2 

                                                 
ECB-PUBLIC 

and BaFin will be required to share all information relevant for the performance 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  Consumer  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  development  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 December 2011 on the macro-prudential mandate of 
national authorities15. 

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 specific 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-prudential 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  institutional  framework  for  macro-prudential  oversight 
recognises  the  essential  role  played  by  the  central  bank17.  It  also  welcomes  the  adequate 

representation  of  the  Deutsche  Bundesbank  in  the  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 required for the adoption and publication of Committee 

warnings and recommendations. 

11  
12  

13  

14  
15  
16  

17  

Article 1, Section 4 of the draft law.  
Finanzdienstleistungsaufsichtsgesetz as published in the announcement of 22 April 2002, Bundesgesetzblatt I, p. 1782, as 
amended. 
The Board will consist of six people with expertise in the area of finance and insurance, instead of ten representatives of 
the supervised companies. Article 2, Section 5 of the draft law, amending Section 7 of the Law on BaFin. 
Article 2 Section 6 of the draft law, inserting Section 8a in the Law on BaFin. 
OJ C 41, 14.2.2012, p. 1, Section 2(4)(2).  
See in this respect the relevant provisions of the proposed regulation of the European Parliament and of the Council on 
prudential  requirements  for  credit  institutions  and  investment  firms  (COM  (2011)  452).  See  the  Council’s  general 
approach of 21 May 2012, available on the Council’s website at www.consilium.europa.eu. 
See e.g. paragraph 5 of Opinion CON/2004/16, paragraph 2.3 of Opinion CON/2010/10 and paragraph 5.1 of Opinion 
CON/2012/44. See also recital 24 of Regulation (EU) No 1092/2010. 

3 

 
 
 
                                                 
ECB-PUBLIC 

3.2  At  the  same  time,  the  performance  of  these  new  tasks  should  not  affect:  (a)  the  Deutsche 

Bundesbank’s  institutional,  functional  and  financial  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 Bundesbank 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  Bundesbank20  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 prohibition of monetary financing under Article 123(1) 
of  the  Treaty,  read  in  conjunction  with  Council  Regulation  3603/93/EC21.  In  particular,  the 

Deutsche Bundesbank’s new tasks performed 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  relevant  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  other  body  may  be  retrieved  automatically22,  and  (b)  the 

Deutsche Bundesbank is entitled to collect information from financial corporations on the basis of a 

statutory  instrument  issued  by  the  Federal  Ministry  of  Finance  in  consultation  with  the  Deutsche 

Bundesbank,  should  the  data  available  from  BaFin  and  other  authorities  be  insufficient  for  the 

fulfilment of the Deutsche Bundesbank’s tasks defined 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  Bundesbank  and  BaFin  should  not  prevent  effective 
information  sharing  amongst  these  institutions25,  also  as  regards  sharing  of  disaggregated 

supervisory or statistical information.  

18  

19  
20  

21  

22  
23  

24  
25  

See, e.g. paragraph 4 of Opinion CON/2009/88, paragraph 2.2.4 of Opinion CON/2010/7 and paragraph 2.9 of Opinion 
CON/2010/10. 
Article 1, Section 1(2) of the draft law. 
Gesetz  über  die  Deutsche  Bundesbank,  as  published  in  the  announcement  of  22  October  1992,  Bundesgesetzblatt  I, 
p. 1782, as amended, Section 12. 
Council Regulation (EC) No 3603/93 of 13 December 1993 specifying 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). 
Article 1, Section 4(2) of the draft law. 
Article 1, Section 5 of the draft law; information that may be collected by the Deutsche Bundesbank may cover all data 
that allow deep insight into the status and the development of the economic conditions 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 structures, bilateral relations, risk management practices and solvency and liquidity 
status. 
Article 1, last sentence of Section 4(2) of the draft law. 
Section 32 of the   Law on Bundesbank and Section 11 of the Law on BaFin. 

4 

 
                                                 
ECB-PUBLIC 

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 exchange 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, Section 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 Member States, in particular as regards exchange 
of  information28.  To  this  end,  the  ECB  further  understands  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  cooperation  and  information-sharing  since  Section  6  of 

the proposed Law on financial stability oversight refers to exclusions from the confidentiality rules 

under  Section  9(1)  of  the  Law  on  Banking  as  applicable  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  should  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 level32, 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 cross-border effects are to be expected. Provision of 

such advance information on Committee warnings and recommendations is necessary, given their 

26  

27  
28  

29  
30  
31  
32  

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,  insurance  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 the European Parliament and of the Council of 21 April 2004 
on markets in financial instruments (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 prudential supervision of credit 
institutions and investment firms and amending Directive 2002/87/EC of the European Parliament and of the Council on 
the  supplementary  supervision  of  credit  institutions,  insurance  undertakings  and  investment  firms  in  a  financial 
conglomerate (‘CRD IV’), Council general approach of 21 May 2012. 
See Article 3(1) of Regulation EU (No) 1092/2010. 
See  paragraph  5.3  of  opinion  CON/2012/44.  See  also  Article  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 prudential supervision of credit 
institutions and investment firms and amending Directive 2002/87/EC of the European Parliament and of the Council on 
the  supplementary  supervision  of  credit  institutions,  insurance  undertakings  and  investment  firms  in  a  financial 
conglomerate, Council general approach of 21 May 2012. 
Article 1 Section 2(6) and Section 6 of the draft law. 
Article 1 Section 6 of the draft law. 
See paragraph 2.2.2 of Opinion CON/2010/7 and paragraph 2.11 of Opinion CON/2010/10. 
See Section B4 of Recommendation ESRB/2011/3. 

5 

                                                 
ECB-PUBLIC 

potential  overlap  in  substance  with  analogous  ESRB  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. 

6