Financial stability and macroprudential policy

Macroprudential policy

Macroprudential policy aims to achieve financial stability through the prevention and mitigation of systemic risks and vulnerabilities, thereby enabling a sustainable contribution of the financial system to economic growth. A systemic risk differs from other risks in that it can affect a significant part or the whole of the financial system and, ultimately, also the real economy. In this context, macroprudential policy complements microprudential supervision, as the latter focuses on risks affecting the safety and soundness of individual financial institutions.

The Banco de España is the national designated authority for the preparation, decision and implementation of macroprudential measures applicable to credit institutions, in accordance with national legislation (Law 10/2014, Royal Decree 84/2015 and Circular 2/2016 of the Banco de España) which transpose and elaborate on Regulation (EU) No. 575/2013 and Directive 2013/36/EU. Likewise, the Comisión Nacional del Mercado de Valores (CNMV) and the Dirección General de Seguros y Fondos de Pensiones (DGSFP) are competent for macroprudential policy concerning those financial institutions under their supervisory remit. All three sectoral supervisory authorities for financial supervision coordinate closely within the Autoridad Macroprudencial Consejo de Estabilidad Financiera (AMCESFI). Established in March 2019, AMCESFI has the statutory objective of contributing to the stability of the financial system as a whole (i.e. including banking, securities, insurance and pension funds) through the identification, prevention and mitigation of sources of systemic risk.

To assist in the objective of achieving financial stability in the banking sector, there are a series of macroprudential instruments at the disposal of the Banco de España that aim to tackle cyclical and structural systemic risks. In particular, the macroprudential toolkit includes the countercyclical capital buffer, capital buffers for systemically important institutions, limits to sectoral concentration, and limits and conditions to bank lending.

Within the Banking Union, the Banco de España works closely with the European Central Bank and national authorities from across the euro area on macroprudential policy matters, in the context of the Eurosystem and the Single Supervisory Mechanism.

At the European Union level, the Banco de España participates in the European Systemic Risk Board (ESRB), the European Banking Authority (EBA) and also interacts with the European Commission.