The ESRB – or, for that matter, any other body responsible macro-prudential oversight – will aim at reducing systemic risk. The establishment of the ESRB but also the new EU supervisory architecture mean that vulnerabilities and potential sources of risk for the financial system will be detected in a timelier manner. This will foster better awareness of these risks and their potential implications.
For that to be viable, both the PRA and the ECB or the Bundesbank would need detailed information on each other’s decisions. Close, responsible cooperation would have to be in place between supervisors. But no bank should put its money on supervisors’ mercy. We take our mandate seriously – there will be no blank cheques.