Work is already under way to set up efficient procedures for regular informationsharing between the ESRB and the ESAs. The second component relates to the instruments available to the ESRB, which should be geared to mitigating systemic risk on the basis of the outcome of the monitoring of the financial system.
As mentioned earlier, they include the issuance of risk warnings and policy recommendations, as well as the monitoring of the follow-up by the respective addressees on the basis of an “act or explain” mechanism. One of the challenges in this respect is ensuring the effectiveness of the ESRB’s instruments.