This is a decentralised, multi-layered system of micro- and macro-prudential authorities, separated according to the respective sectoral area – banking, insurance and securities markets. The objective of the ESFS is to ensure consistent and coherent financial supervision and the effective implementation of the rules in the financial sector.
By investing (directly or indirectly) in shares and private sector bonds, the pension fund sector may offer alternative sources of financing for the non-financial corporate sector, and hence may provide a substitute for bank financing, which remains the predominant source of corporate funding in the euro area.