It will be responsible for macro-prudential oversight to prevent or mitigate systemic risks, enhance early warning mechanisms and facilitate the translation of risk assessments into action so as to avoid episodes of widespread financial distress, to enhance the smooth functioning of the internal market, and ensure a sustainable contribution of the financial sector to economic growth.
The ESRB can issue warnings and recommendations for action, which while not binding for the addressee, inaction by the addressee will have to be explained. The three microprudential components of the ESFS will start their supervisory activities at the beginning of next year.