The Committee for Financial Stability (Ausschuss für Finanzstabilität or AFS) serves as the central body for macroprudential oversight in Germany, established at the beginning of 2013 through the Financial Stability Supervision Act. The committee is composed of three representatives each from the German Federal Ministry of Finance (BMF), Deutsche Bundesbank (German central bank), and the Federal Financial Supervisory Authority (BaFin). Additionally, a non-voting member from BaFin, responsible for the resolution department, participates in an advisory capacity. This composition ensures the representation of all public institutions involved in the macroprudential supervision of the German financial system, providing expertise and evaluations from various institutions. The AFS holds quarterly meetings during which it discusses matters relevant to financial stability and can issue warnings or recommendations. Annually, the AFS submits a report to the German Bundestag.
Composition of the Committee for Financial Stability (AFS)
The Financial Stability Supervision Act grants a prominent role to the Deutsche Bundesbank within the AFS. Specifically, the Bundesbank is tasked with analyzing factors relevant to financial stability and identifying and evaluating risks to financial stability (macroprudential oversight). Based on its ongoing work, the Bundesbank prepares submissions for AFS meetings and provides situation reports, which serve as a basis for discussions. If the Bundesbank identifies threats to financial stability through its analysis, it presents proposals to the AFS for issuing warnings or recommendations to counter or mitigate these risks.
The recipient of a warning or recommendation can be the German federal government, BaFin, or another public authority in Germany. Recommendations suggest measures suitable for averting the identified risks to financial stability. The recipient is obligated to explain to the AFS within a reasonable period how they have implemented the recommendation or provide a justification for why they chose not to implement it. The Bundesbank monitors and assesses the implementation measures, forwarding its evaluations to the AFS.
The quality of the Bundesbank’s analyses depends significantly on the data available. If the necessary information is not available to BaFin or other authorities, the Bundesbank can directly request it from financial corporations based on a decree issued by the BMF.
Simultaneously, the AFS serves as the interface to macroprudential supervision in Europe. It acts as a point of contact for the European Systemic Risk Board (ESRB) and the macroprudential authorities of other EU member states. The AFS informs the ESRB about its warnings and recommendations and deliberates on warnings and recommendations concerning Germany issued by the ESRB.