European Systemic Risk Board (ESRB) has been established on 16-Dec-10:
The legislation establishing the European Systemic Risk Board (ESRB) came into force today. The seat of the ESRB is in Frankfurt am Main and its Secretariat is ensured by the European Central Bank (ECB).
The ESRB is an independent EU body responsible for the macro-prudential oversight of the financial system within the Union. It shall contribute to the prevention or mitigation of systemic risks to financial stability in the Union that arise from developments within the financial system. The ESRB shall also contribute to the smooth functioning of the internal market and thereby ensure a sustainable contribution of the financial sector to economic growth.
As foreseen in the legislation, the Chair of the ESRB is the President of the European Central Bank, Mr Jean-Claude Trichet. Mr Mervyn King, Governor of the Bank of England, was elected today as first Vice-Chair of the ESRB by the members of the General Council of the ECB.
Interestingly, ESRB looks at whole EU which is 27 members where as ECB looks at EMU which is 16 members (to become 17 as Estonia joins on 1 Jan 2011). Again, there is likely to be confusion as non-EMU members have set up/about to set up their own macroprudential bodies.
Take the case of UK. BoE has been given macroprudential powers and a seperate commitee will be looking at all these things. A specific role has been accorded for financial stability in the BoE board with Paul Tucker as Deputy Governor, Financial Stability.
And now we have Mervyn King, Governor of BOE as vice chair of ESRB. Again, there will be a need to clarify all these roles carefully. Otherwise again there will be skipping of responsibilities and blame games will be played. Will King tell Tucker on spotting a financial risk in UK? And then how will Tucker repond? Likewise, we are likely to have similar situations in non-EMU members like Sweden, Denmark, Poland etc.
Coordinating/Merging all these European policies at one level is never an easy task. And as the crisis lessons show, need to do all this with vigilance.
Mostly Economics 
