What is the difference between macroprudential and microprudential supervision?
Microprudential supervision focuses on the protection of creditors and on the soundness of individual financial institutions. Microprudential supervisors therefore monitor individual institutions.
Macroprudential supervision focuses on maintaining the safety and soundness of the financial system as a whole, reducing the cost of financial crises to society, and sustaining economic growth in the medium to long term. Macroprudential supervision monitors the structural risks arising from systemic linkages that contribute to the inherent tendency of the financial system to amplify the ups and downs of the business cycle; furthermore, it monitors the risks arising from direct and indirect linkages between financial institutions and the nonfinancial sectors of the economy.
How can supervisors address the risks to the financial system?
Supervisors have at their disposal a set of macroprudential tools with which they can address the risks to the financial system.
How does national supervision fit into the Single Supervisory Mechanism (SSM)?
Within the SSM, the new framework for banking supervision in Europe, the European Central Bank (ECB) can, where necessary, set higher prudential requirements for capital buffers than those defined by the national supervisory authorities of the participating EU Member States. Moreover, the ECB has established close coordination and cooperation procedures with the authorities that are in charge of macroprudential supervision in the participating Members States.
What macroprudential measures have been taken by other EU Member States?
For such information, see the website of the European Systemic Risk Board (ESRB). The ESRB publishes all macroprudential measures of which it is notified on this website.