IMF: Financial Sector Stability Assessment on the European Union

16 March 2013

The prospective introduction of the single supervisory mechanism (SSM) and the experience to date with the European Supervisory Authorities (ESAs) raise some important transparency and accountability issues.

As far as the SSM is concerned, the key issues are how this may affect the appropriate transparency arrangements for monetary policy and what arrangements should be put in place for the SSM. For the ESAs, the issue is how transparency, accountability and governance arrangements might be strengthened, based on the experience since their establishment in 2011.

A number of measures are recommended to promote the credibility of monetary and supervisory policies when the ECB assumes supervisory responsibilities:

• the ECB should begin to publish timely minutes of meetings to decide on monetary policy settings;
• the ECB should begin to publish more medium-term detail on its macro-economic projections and alternative scenarios;
• the Supervisory Board of the SSM should develop and publish a set of guidelines that it will follow in formulating policy recommendations;
• the Supervisory Board should also publish minutes of its policy meetings;
• the ECB should consider establishing an external panel of experts to provide an independent oversight of the SSM. The panel should publish regular reports as well as provide direct feedback to the Supervisory Board; and
• the ECB should clarify and make transparent the working relationships between the macro-prudential and micro-prudential areas of its mandate, and its relationship with the ESRB.

Additionally, some measures are recommended to enhance the transparency and effective accountability of the ESAs:

• transparency would be increased by reassessing the mandates of the ESAs with a view to reducing overlaps with others ESAs and the ESRB and the ECB;
• effective accountability and autonomy of the ESAs could be enhanced by strengthening the decision-making responsibility of ESA management, and introducing more Europe-wide representation on the Boards of Supervisors; and
• policy transparency and efficiency would be enhanced by modifying ESA funding arrangements to give them greater responsibility and autonomy in staff and budget management.

Full report

© International Monetary Fund