Financial stability and macroprudential policy

What is financial stability?

The Law 13/1994 on the Autonomy of the Banco de España assigns to the central bank the function, among others, of promoting the sound functioning and stability of the financial system. The aim of this function is to ensure the soundness and efficiency of the financial system as a whole and, thereby, smooth the transfer of resources among agents, from savers to demanders of funds.

In turn, the Law 10/2014 on the regulation, supervision and solvency of credit institutions establishes that the Banco de España is the national designated authority responsible for applying macroprudential policy measures to address systemic risks that threaten the stability of banking system as a whole (or parts thereof).

The Banco de España carries out several tasks that are relevant for preserving and fostering financial stability. On the one hand, within the framework of the European Single Supervisory Mechanism, Banco de España supervises individual banks (micro level) with a focus on their prudential safety and soundness. Besides, Banco de España oversees the banking system (macro level) and implements appropriate macroprudential policy measures with the aim of preventing or mitigating identified systemic risks. It is ultimately sought that the financial system sustainably contributes to the country’s economic growth and well-being.

In the area of financial stability, the Banco de España:

  • Monitors and regularly analyses the risks and vulnerabilities of the Spanish financial system, with a focus on the banking sector. The outcome of this work is disclosed through the Financial Stability Report that the Banco de España publishes on a half-yearly basis (around May and November).
  • Participates in the Macroprudential Authority Financial Stability Council (AMCESFI) together with other Spanish authorities with macroprudential responsibilities.
  • Participates in several international and EU institutions and fora.

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