EU risk board starts work in tough environment
European central bankers kicked off Thursday the work of a new body aimed at preventing another major crisis, acknowledging that Europe's financial situation was fragile and demanding.
"We are living in a demanding period," European Central Bank president Jean-Claude Trichet told media after the European Systemic Risk Board (ESRB) held its inaugural session at the bank's headquarters in Frankfurt.
"I think everyone is conscious of the fragility of the situation in Europe," Bank of England governor Mervyn King added.
He described the first session's work as one of establishing "building blocks of a process" designed to assess and prevent potential risks to EU financial stability.
Neither Trichet, the first ESRB chairman, nor King, its first vice-chair, wanted to immediately identify systemic risks, stressing instead a "candid and encouraging" exchange of views by experts from across the continent.
The 37-member board can issue warnings and recommendations to banks, market operators, governments and EU institutions when it identifies problems and can decide by a vote of at least two thirds to make its communications public.
Such problems could include financial or real-estate market bubbles, dysfunctional market infrastructures or budget imbalances.
Trichet emphasised that the ESRB would not "substitute for those authorities and entitities to which we are sending the warnings," but would use its "moral authority" and apply a concept of "comply or explain."
The target of a recommendation would be expected to comply with it or explain why it did not.
If the board was not convinced it would then inform the EU's highest instance, the Council of ministers.
The new ESRB chairman said it would not take its authority for granted but earn it while drawing on the mandates of its members.
They included all EU central banks, European and national supervisors and a member of the European Commission.
© 2011 AFP