The Board of Supervisors of the European Banking Authority (EBA) held its inaugural session today, 12 January 2011, in London. Austrian interests in this new European central supervisory institution are represented by the Financial Market Authority (FMA), as a voting member. The Oesterreichische Nationalbank (OeNB) participates in the meetings as a non-voting member. At the committee meetings of the EBA, FMA Executive Director Helmut Ettl will speak in favour of Austrian interests. During the first session, in addition to agreeing the Rules of Procedure, the institution also elected the six members comprising the EBA Management Board.
“The FMA, supported by the Oesterreichische Nationalbank, will work actively on the committees of the EBA, both to robustly represent Austrian interests and to work intensively on the harmonisation of new legislation and the enforcement of the law within Europe,” commented FMA Executive Directors Helmut Ettl and Kurt Pribil, before proceeding to explain, “The creation of a European culture of supervision and consistent and coherent application of EU legislation form the basis for ensuring that Europe is a strong, secure and fair financial market.”
Within the new European supervisory system, which entered into force on 1 January 2011, the EBA is the central European Supervisory Authority (ESA) with responsibility for supervision of the banking sector. Its counterparts in the securities sector and insurance and pensions sector are the Paris-based European Securities Markets Authority (ESMA), and the European Insurance and Occupational Pensions Authority (EIOPA), based in Frankfurt am Main. These three ESAs have been formed from the former level 3 committees (the Committee of European Banking Supervisors, CEBS; the Committee of European Insurance and Occupational Pensions Supervisors, CEIOPS; and the Committee of European Securities Regulators, CESR), on whose infrastructure they have been created.
Each ESA has an independent, full-time Chair, who acts as the face of the authority. The Chair is elected by the Board of Supervisors, and must be confirmed in his or her post by the European Parliament. However, operational and administrative decisions of the authorities are made by the Board of Supervisors, which is composed of one representative of each of the national supervisory authorities of the EU Member States. Austria is represented in this body by the FMA, as a voting member. Alongside the Board of Supervisors, each of the ESAs has a Management Board comprising six members, to which responsibility is conferred for specific organisational tasks. Each of the authorities is led by an Executive Director, who prepares the work of the Management Board. He or she is appointed by the Board of Supervisors.
The three authorities will continue the activities of the former level 3 committees. However, their scope of activity, responsibilities and therefore the powers available to them for inspection have been greatly expanded – in close cooperation with the national supervisory authorities – in line with their position as an authority. To this end, they must conduct regular comparative analysis (referred to as peer reviews), and must monitor and evaluate market developments, and develop criteria and methods for measuring systemic risks. In the event of differences of opinion and disagreements between national supervisory authorities, they may also issue decisions that are binding for all concerned, and may also issue decisions directly to financial institutions in the exercising of their specific supervisory powers.
In addition to evaluating and refining the guidelines of the former CEBS to produce binding technical standards, the EBA will collaborate with the European Systemic Risk Board (ESRB) to develop a Risk Dashboard – a unified set of quantitative and qualitative indicators to determine and measure systemic risk. The EBA must also conduct risk assessments on at least an annual basis to determine trends, potential risks and weaknesses, and forward its reports to the European Parliament, the European Council, the European Commission and the ESRB. For this purpose, binding Europe-wide stress tests must also be carried out. Work on preparing the 2011 stress testing programme is currently ongoing. Moreover, the EBA is the first to chair the Joint Committee of European Supervisory Authorities, a position that rotates each year. The Chairperson of this Committee is also the Acting Chair of the ESRB.
Klaus Grubelnik (FMA Media Spokesperson)
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