claudia buch : public hearing on the review of the eu macroprudential framework – panel discussion statement by prof claudia buch, deputy president of the deutsche bundesbank, at the public hearing on the review of the eu macro - prudential framework - panel discussion, european commission, brussels, 7 november 2016. * * * 1. overview after the financial crisis, macro - prudential policy has been established as a new policy area with the mandate to ensure the stability of the financial system as a whole and to prevent systemic risks building up. systemic risks in financial systems arise if distress in one institution or a group of financial institutions threatens the functioning of the entire financial system. resilience of the financial system with regard to systemic stress thus requires buffers which take these externalities into account. experience with macro - prudential policies is limited though, which requires a continuous monitoring of the progress that has been made. the consultation process that has been launched by the european commission on the macro - prudential framework is a key element of monitoring the effectiveness and efficiency of macro - prudential institutions. effective macro - prudential policies are particularly needed at the european level, given the close real and financial linkages between member countries of the european union ( eu ). effective macro - prudential policies require an institutional set - up with three key characteristics. first, the institutional set - up should allow tracking potential risks to financial stability. second, it should clearly assign responsibility for the use of macro - prudential instruments. third, it should allow for the effective coordination between institutions tasked with macro - prudential mandates. in this regard, the european systemic risk board ( esrb ) has a critical function. maintaining its current strength and improving its institutional set - up, where needed, should thus be a priority. maintaining and strengthening the role of the esrb gives rise to questions concerning its mandate and its role as well as the organizational structure and the institutional links with the ecb. when the esrb was established, the ecb did not have the role of a micro - prudential banking supervisor nor did it have macro - prudential responsibilities in the banking sector. this has changed with the banking union and the establishment of the single supervisory mechanism ( ssm ). therefore, potential changes in the esrb ’ s organizational structure and its ties to the ecb should reflect the ecb ’ s new role in the ssm. overall, the esrb

area what the rationale for the historic process of establishing a highly integrated european union is. all in all, that process has proceeded remarkably successfully for more than half a century now. zeit : so, what is its rationale? trichet : european integration is essential for ensuring the peace, stability and prosperity of the nations of europe. all of the reasons we had to engage in this historic endeavour after the second world war are still valid. the balance of power is shifting at the global level. new powers are on the rise in asia, latin america and africa. we are experiencing a very rapidly changing new world with a lot of opportunities, challenges, risks and uncertainties. european unity is more important than ever. zeit : what role does germany play in that? trichet : germany played a decisive role in the establishment of the treaty of rome in 1958, the single european act in 1986 and, in particular, monetary union. germany has also bis central bankers ’ speeches succeeded remarkably well in regaining its competitiveness over the last ten years. your country is now reaping the rewards of its patient efforts, and the euro area is benefiting from this. a strong german economy is good for europe. zeit : in germany, of all places, eurosceptic voices are now being heard. are the germans even ready for europe? trichet : i travel a lot in germany, and my impression is that while the initial reaction may be sceptical, deeper down everybody is aware of the importance of our historic project, aware of the importance of close cooperation and friendship between the nations of europe. i believe people know that there is no other way of achieving peace, prosperity and stability. zeit : even germans are feeling anxious – they have the impression that monetary union is no longer what they were promised. rules were broken. people are apprehensive that the euro will become a soft currency. trichet : there are many ways of seeing things in a democracy. concerns like these were voiced even when i was involved in negotiating the treaty of maastricht with theo waigel, the minister of finance, horst kohler, staatssekretar, and the other members of the german delegation. but the facts are much more important. for instance, it was unfortunately germany and france which weakened the stability and growth pact in 2004 and 2005. it ’ s also a fact that price stability is greater today than during the period of the deutsche mark. the average